Explained: Why PhysicsWallah shares surged 18% today

Ending a five-session losing streak, shares of PhysicsWallah rallied as much as 18% on Thursday in an otherwise muted market, after the edtech company announced a major shift in its lending strategy aimed at reducing balance-sheet risk and improving capital efficiency.

PhysicsWallah shares surged as much as 17.75% to hit an intraday high of ₹108.45 on the BSE, rebounding sharply after losing nearly 20% over the previous five trading sessions.

At the time of reporting, the stock was up 15% at ₹105.95, with a market capitalisation of ₹30,503 crore. Trading volumes also jumped significantly, with 23 lakh shares changing hands compared to the two-week average of 3.65 lakh shares.

What triggered the rally?

PhysicsWallah, co-founded by Alakh Pandey and Prateek Maheshwari, informed stock exchanges that it will move away from lending on its own balance sheet and instead partner with multiple regulated third-party non-banking financial companies (NBFCs) to meet students’ financing needs.

Under the revised model, the Noida-based company will function as a technology platform, connecting students to a curated network of lending partners based on their learning lifecycle and academic outcomes. This move reverses the company’s earlier plan to originate loans through its wholly owned NBFC subsidiary, FinZ Finance.

The market seems to have welcomed the decision as it materially lowers credit risk, funding requirements, and balance-sheet exposure associated with the lending business.

In a recent interview with Fortune India, Prateek Maheshwari had indicated that the company would remain cautious about capital deployment in the lending business, emphasising that the primary objective was to improve educational inclusion for lower-middle-class and underprivileged students rather than build a large lending franchise.

“There will not be any meaningful capital allocation in this vertical. The objective is to improve inclusion in mainstream education for lower-middle-class and underprivileged students,” he had said.

PhysicsWallah had recently announced an investment of approximately ₹120 crore through an equity infusion in its wholly owned subsidiary, FinZ Finance Private Limited. FinZ, which received its RBI NBFC licence in September 2025 and commenced operations in March 2026, was created to provide short-term academic loans to students.

However, the company’s management has now opted for an asset-light approach.

“We received feedback from our partners that our core strength lies in building communities and our online business. Our lending business is best left to regulated third-party NBFCs, which have developed robust underwriting capabilities,” said Maheshwari.

He added that prudent capital allocation and shareholder value remain the company’s foremost priorities, prompting management to revisit its earlier decision and rely on established lenders instead.

By partnering with established NBFCs rather than lending directly, PhysicsWallah can continue improving affordability and access to education without deploying significant capital or assuming loan-default risks. The shift also allows management to focus on its core education business while preserving financial flexibility.

The company said the future strategic direction of FinZ Finance will be decided in due course, subject to board and regulatory approvals.

For FY26, PhysicsWallah’s revenue rose 39% year-on-year to ₹3,244.56 crore from ₹2,333.98 crore a year earlier. The company also narrowed its standalone net loss to ₹39.92 crore from ₹135.63 crore in FY25.

In the March quarter, revenue from operations surged 58.4% year-on-year to ₹735.94 crore, while the standalone net loss narrowed to ₹131.76 crore from ₹314.18 crore in the corresponding period last year.

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