The highly anticipated initial public offering (IPO) of the homegrown edtech giant, PhysicsWallah, commenced for subscription on Tuesday, November 11, meeting with a subdued response from the investment community on its debut day.
Barring the segment reserved for the company's employees, all other investor categories witnessed undersubscription. Potential bidders, however, have the opportunity to apply for the public issue until Thursday, November 13.
Detailed IPO Subscription Status
Data from the first day of bidding reveals that the PhysicsWallah IPO received bids for 1,31,22,682 shares against a total offer of 18,62,04,143 shares. This translates to an overall subscription rate of just 7%.
A closer look at the category-wise data shows a varied picture. The portion for retail individual investors (RIIs) was subscribed 33%, indicating moderate interest from the general public. The segment for non-institutional investors (NIIs) saw a meager 2% subscription. Notably, the qualified institutional buyers (QIBs) category did not see any participation on day one. In a positive sign, the employee reservation portion was oversubscribed 1.11 times.
A Sharp Decline in Grey Market Premium
Reflecting the cautious market sentiment, the grey market premium (GMP) for PhysicsWallah shares has witnessed a drastic decline. As of today, the PhysicsWallah IPO GMP stands at just ₹3. This indicates that the shares are being traded at a premium of ₹3 over the upper end of the price band, which is fixed at ₹109 per share.
At the current GMP level, the shares are projected to list at approximately ₹112, a modest premium of 2.75%. This is a significant drop from a GMP of ₹9 and marks the lowest level observed so far.
IPO Details and Fund Utilisation Plan
Ahead of the public opening, the company successfully raised ₹1,563 crore from anchor investors on Monday. The total size of the PhysicsWallah IPO is ₹3,480 crore. The shares are priced in a band of ₹103 to ₹109 each. At the upper price limit, the company is aiming for a valuation of ₹31,500 crore.
The IPO comprises a combination of a fresh issue of shares worth ₹3,100 crore and an offer for sale (OFS) of ₹380 crore by the promoters. Founders Alakh Pandey and Prateek Boob will be offloading shares worth ₹190 crore each through this OFS.
The company has outlined a clear plan for utilising the proceeds from the fresh issue. A significant portion will be directed towards expansion and growth. Key allocations include:
- ₹460.5 crore for fit-outs of new offline and hybrid centres.
- ₹548.3 crore for lease payments of existing centres.
- ₹47.2 crore investment in its subsidiary, Xylem Learning.
- ₹33.7 crore for Utkarsh Classes & Edutech for lease payments.
- ₹200.1 crore for server and cloud infrastructure.
- ₹710 crore for marketing initiatives.
- ₹26.5 crore for acquiring an additional stake in Utkarsh Classes.
PhysicsWallah offers test preparation courses for competitive exams and other programs like upskilling courses. Its multi-channel delivery model includes online platforms via its website and apps, tech-enabled offline centers, and hybrid centers that use a unique two-teacher model for enhanced student support.
The shares of PhysicsWallah are scheduled to be listed on the Indian stock exchanges on November 18.
