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The initial public offering of ed-tech company PhysicsWallah one of the most awaited IPOs of the season began on a quiet note with lukewarm bidding on Day 1. The issue received bids for only 1.31 crore shares or 7% of the offered issue size of 18.62 crore shares on Day 1 of bidding. Underwhelming retail subscription On a more granular level the subscription details are also telling: while retail individual investors (RIIs) put in bids for 33 % of the issue size non-institutional investors (NIIs) subscribed at just 2% and qualified institutional buyers (QIBs) did not put in any bids on Day 1. The only category that saw some decent demand at about 1.11 times was the employee category. The absence of significant institutional interest is often interpreted by the market as a negative signal — particularly for a large‐size IPO. PhysicsWallah IPO price valuation and issue size PhysicsWallah has priced its IPO in the range of ₹103–109 per share with the company aiming for a valuation of up to ₹31500 crore at the upper end of the price band. The total issue size is ₹3480 crore including a fresh issue of ₹3100 crore and an offer-for-sale (OFS) of ₹380 crore by the promoters; the company’s co‐founders Alakh Pandey and Prateek Boob are selling shares worth about ₹190 crore through the OFS. The company raised about ₹1563 crore from anchor investors on the day before the public issue opened. Business model and use of proceeds In its IPO prospectus PhysicsWallah has disclosed its capital deployment plans in detail. The company plans to use ₹460.5 crore for opening offline and hybrid centres some ₹548.3 crore for lease payments towards the running of its existing centres ₹200.1 crore for server and cloud infrastructure ₹710 crore for marketing activities and ₹26.5 crore for buying an additional stake in its subsidiary. The company describes itself as a ‘one-stop integrated learning platform’ that offers learning solutions across online hybrid and offline formats; these include test preparation for competitive exams up-skilling programs and live-class models. Grey Market Premium market cues and signals On the grey market the premium (GMP) on the PhysicsWallah IPO has come down sharply to about ₹3 over the upper band price of ₹109 suggesting a listing price of about ₹112 at a premium of ~2.75 % (would be lower if aftermarket NII selling occurs). The GMP has come down from previous levels of around ₹9. A shrinking GMP is often one of the earliest indications of investor scepticism; if grey-market investor enthusiasm evaporates that may be indicative of underlying investor doubts about the listing premium or valuation support. Possible reasons for subdued Day 1 While PhysicsWallah is in a high-growth high-potential ed-tech segment a few other factors could have put investors off on Day 1: The large issue size and high valuation that the company is targeting with the upper band implying a forward PE of ~47X may have made a large listing premium difficult to justify with reasonable growth assumptions The lack of any institutional bids on Day 1 suggests that large funds may be sceptical about the short-term visibility on growth or profit-making timelines. General market conditions particularly the current appetite for IPOs may be fragile after a series of recent high-profile new listings. Execution risks inherent in the offline/hybrid expansion in an age where online learning is already facing some disruption could have given investors pause. PhysicsWallah outlook what to watch? With the issue open till 13 November and listing due on 18 November the primary focus for both the issuer and investors will be on how the subscription shapes up in the next few days and the final allocation mix. A ramp up in RII and NII subscription in the remaining days of the issue period could restore some confidence. If the response remains muted it could make the market revisit its listing premium and momentum expectations. For PhysicsWallah the coming months after the listing will be crucial: if the company is able to scale up its offline/hybrid centres profitably meet its growth targets and continue to build on its online momentum and actually meet investor expectations on financial performance it might finally see the post-IPO valuations go par (Rs 112 as per the GMP). Till then a muted opening day might be signalling that the market is hedging its bets with a lower premium.