PhysicsWallah shares surge over 4% after Motilal Oswal initiates coverage with Buy rating. Should you buy?

PhysicsWallah's stock price skyrocketed by more than 4% on the National Stock Exchange, reaching a high of Rs 126.75 in early trade on Friday. Motilal Oswal, an investment firm, initiated coverage of the education technology company with a "Buy" rating and set a target price of Rs 200 per share. This implies a potential upside of around 66% from the company's reference price of Rs 121.

Motilal Oswal praised PhysicsWallah as one of India's most capital-efficient education platforms, citing its low-cost customer acquisition model, affordable courses, and growing online and offline presence. Despite a slight decline of 1.05% in shares over the past month, the stock showed resilience following Motilal Oswal's positive outlook.

The brokerage firm expects PhysicsWallah's revenue to surge from Rs 3,899.4 crore in FY26 to Rs 6,138.9 crore in FY28, marking a projected growth of 26.8% in FY27 and 24.2% in FY28. Similarly, EBITDA is anticipated to rise from Rs 548.6 crore in FY26 to Rs 1,400.1 crore in FY28, with an EBITDA margin expanding from 14.1% to 22.8%.

Motilal Oswal's target price of Rs 200 for PhysicsWallah is based on a valuation of 110 times estimated FY27 earnings and 59.9 times FY28 earnings. The firm also highlighted the company's unique selling points, such as its large user base of 83 million app downloads and 100 million YouTube subscribers, which keep marketing expenses low at around 4% of revenue. This, combined with the online dominance and offline scalability, gives PhysicsWallah a competitive edge in the education sector.