Accumulate Physicswallah; target of Rs 140: Prabhudas Lilladher

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • Expansion into new categories like online K-12, early learning, and upskilling is expected to drive revenue growth.
  • Healthy operating leverage in the online business, with fixed content, faculty, and platform costs, is expected to improve margins.
  • The company aims to achieve pre-IND AS EBITDA breakeven in the offline business during FY27E.
  • Strategic initiatives like the digital university and AI tutor app, Tuto, are expected to expand the company's offerings and improve profitability.

Thesis Validation Checklist

To validate the investment thesis, investors should watch for:

  • Revenue growth guidance of ~30% for FY27E, with a built-in cushion of buy-outs.
  • Expansion into new categories and geographies, such as South India, contributing to topline growth.
  • Improvement in operating leverage and margins, driven by fixed costs in the online business.
  • Progress on strategic initiatives like the digital university and Tuto, and their impact on profitability. If these signals are observed, it would indicate that the company is on track to deliver its growth guidance and improve profitability, validating the Accumulate stance and SoTP-based target price of INR140.