Physicswallah’s next test: Turning NEET recovery into growth
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From its 52-week high of ₹161.99 seen in November, the Physicswallah stock is down 25%. A turnaround in the stock’s performance depends on whether the company manages to meet its guidance, especially after a mixed June quarter (Q1FY27) amid NEET disruption. Online business remained a key driver, with revenue rising 33.2%, aided by traction in K-12/Early Learning, vernacular and newer categories. A leash on costs also helped. But offline business growth was subdued due to the NEET timing shift. Overall, revenue rose 24.4% year-on-year to ₹1,054 crore, while reported Ebitda loss narrowed to ₹13 crore from ₹70 crore in Q1FY26. On a pre-Ind AS basis, Ebitda loss declined to ₹44 crore from ₹89 crore. The management retained its FY27 guidance of 30% revenue growth and a doubling of pre-Ind AS Ebitda. NEET disruption An important factor that would reflect in near-term earnings performance is the impact of the delayed NEET cycle. The examination and result schedule was pushed back by five-seven weeks, affecting both collections and enrolments in Q1FY27. Offline revenue consequently grew 14.5%, but management estimates that growth would have been around 22-25% under the normal exam calendar. Since July, offline NEET enrolments have increased 82% year-on-year, while online NEET collections rose 51% between 1 July and 13 August after declining 28% in Q1. This creates a favourable comparison for Q2FY27, but the recovery still needs to translate into recognised revenue and improved centre-level profitability. Offline drag Offline pre-Ind AS Ebitda loss was ₹106 crore in Q1, with the margin at -21.6%. At the same time, centres opened during 2022-24 became Ebitda positive in FY26, while newer centres opened in 2025 remained loss-making. This suggests that centre maturity is improving economics, although the offline business remains the larger profitability drag. By the consistent performance of the online business, pre-Ind AS Ebitda rose 168% to ₹67 crore, lifting the margin to 12.2%. Average Collection Per User (ACPU) increased 10% to ₹4,312, indicating some improvement in monetization. Beyond NEET Growth is also becoming less dependent on the traditional JEE and NEET categories. K-12 and early-learning revenue increased 88% to ₹105 crore, with enrolments rising 41%. NEET PG collections doubled, while CA, CS and ACCA enrolments grew 30%. However, several newer categories still require investment and have yet to reach the profitability of mature online offerings. Cost control needs to be sustained as growth investments continue. Employee costs excluding ESOPs declined as a percentage of revenue, while advertising and promotion expenses increased only 9% despite 24.4% revenue growth. AI-led automation has also started contributing to people-cost efficiencies. Meanwhile, the company is also exiting FinZ and intends to focus capital on online content and selective acquisitions, while offline expansion will remain dependent on centre-level economics. According to JM Financial Institutional Securities, the company’s decision to exit FinZ, through which it earlier intended to offer education loans to students, addresses the earlier capital-allocation concern.
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