Physics Wallah’s ₹3,480-crore initial public offering is set to test whether investors have appetite for a prominent “affordable edtech” story. Early signals suggest the market remains cautious.
The grey market premium (GMP) for the company’s shares has recently halved, slipped to just ₹5 as of 8 November from ₹9 two days prior. This erosion of confidence points to a modest expected listing gain of only 4-5% at a projected price of around ₹114 per share.
The shares will be offered in the price band of ₹103- ₹109 apiece, with the offer opening on Tuesday. The total issue includes a substantial ₹3,100 crore fresh issue of shares and a smaller ₹380 crore offer for sale by its two founders, Alakh Pandey and Prateek Maheshwari. They will together continue to own about 70-72% of the company, post-listing.
Nonetheless, the cooling sentiment reflects a cautious market mood towards loss-making startups, particularly in the shadow of Byju’s collapse, said Anil R, research analyst at Geojit Investments. “Byju’s hangover still lingers over the edtech space, even as investors recognise Physics Wallah’s disciplined approach and mass-market ambition,” he said.
Interestingly, the subdued mood around the issue isn’t necessarily a red flag for Anil. To him, Physics Wallah’s story is not a short-term listing trade but a long-term scalability play, built on clear fundamentals and disciplined growth.
Risk multiples
At the upper end of its price band, Physics Wallah is seeking a ₹31,170-crore valuation, valuing the company at 10.8 times FY25 revenue, as per Mint’s analysis. That’s 33% higher than its last private valuation of ₹23,439 crore (8.3x FY25 revenue) in September 2024, even as profits remain elusive. The company has recorded a net loss of ₹243 crore in FY25.
In the absence of any listed peer to benchmark against, the company’s valuation mark-up has only heightened caution among investors, noted experts. This exposes the tension between Physics Wallah’s social mission and the market’s growing insistence on profitability, they said.
Affordable moat
But Physics Wallah’s affordability is also its strongest pitch. It is a key factor differentiating the company from its competitors, said Maheshwari, whole-time director at the company.
“While others target the top 5% of the student base, we focus on the 95% of India which is 20 times bigger,” Maheshwari said in an interview with Mint.
What began as Alakh Pandey’s free YouTube channel in 2016 has evolved into India’s largest education community, boasting over 13 million subscribers. The company monetized this network by introducing affordable online batches, then scaled into hybrid and offline formats under the Vidyapeeth and Xylem Learning brands, Maheshwari added.
Physics Wallah’s online courses, often priced close to examination form fees, are designed for aspirational students in tier-2, tier-3 and rural markets, the company co-founder noted. “Even our off-line courses are 50% cheaper than our competitors’ which average at ₹80,000,” he added.
Now the company claims leadership in 15 of 38 exam categories based on its large student base and exam outcomes in a bevy of entrance and other exams such as JEE, NEET, UPSC, CA and GATE, according to its RHP. This positions Physics Wallah as an affordable, exhaustive edtech player outside the Byju’s ecosystem, noted analysts.
As of Q1 FY26, Physics Wallah employs 6,267 faculty members who teach around 2.1 million students online and 330,000 more in off-line centres, the RHP showed. The company currently operates 303 tuition centres, adding 105 new locations in just three months as of the June quarter of FY26.
Physics Wallah’s hybrid model is its another powerful competitive moat. “We have built a tech-first, community-led network with measurable outcomes. Now we have a strong offline backbone.”
Off-line push, online discipline
The company’s hybrid pivot is now clearly visible in its revenue mix. While online learning drives Physics Wallah’s volume and scale, offline centres have emerged as the premium growth lever, according to its offer documents.
The off-line segment contributed 45% of the total revenue in FY25, up from 38% a couple of years earlier. Meanwhile, the online segment’s revenue share fell to 48% from 61% during the same period.
With an average revenue per user (Arpu) of ₹40,500, the offline business earns nearly 11 times more than the online segment, where Arpu is at ₹3,683 as of FY25. Yet, online students made up about 90% of the company’s 4.46 million total users in FY25, cementing its role as the volume driver. The 330,000 offline students underpin its high-margin tier.
Hence, the company has outlined an aggressive offline expansion plan to increase its profitability, its RHP showed. It plans to open around 95 new Vidyapeeth centres, 30 Pathshala hubs, and 107 other offline centres across India over the next three years and has earmarked around ₹460 crore from the IPO proceeds for this expansion. It currently operates 303 centres, adding 105 new locations just in the June quarter of FY26.
Its operating revenue of ₹2,887 crore in FY25 showed an almost 50% year-on-year jump. Simultaneously, its operating profit almost trebled to ₹193 crore from FY24 (after adjusting for a non-cash mark-up in the value of its convertible preference shares) , according to the offer documents. Based on that adjusted value, the company’s operating margins also doubled to 6.7% in FY25 from 3.5% a year ago.
Geojit Investments’ Anil attributes these sharp operational gains to Physics Wallah’s rapid offline expansion and the growing share of high-margin value-added services, both of which have improved profitability through higher Arpus.
Offerings, such as premium power batches, two-way interactive classes, and personalised mentorship, now account for nearly 30% of the student base, noted Physics Wallah’s Maheshwari. “These offerings provide a steady boost to margins and help with student retention,” he said.
Even in smaller towns, students are willing to spend upwards of ₹20,000 on bundled premium courses that offer live doubt-solving and mentorship, Maheshwari noted. “The appetite for quality education runs deeper than income levels,” he said, adding that it underscores the potential for profitability at scale over time.
Pain points
However, the company’s growth has been built on costly foundations. Employee expenses, at ₹1,400 crore, rose 21% year-on-year, accounting for nearly half of total revenue in FY25. Though, higher spending on talent reflects the company’s efforts to curb teacher churn amid rising competition, noted experts.
“Our churn was high during rapid off-line expansion. Particularly amongst lateral hires,” Maheshwari said. “So we are building our own teacher pipeline. This is an investment, not an expense.”
Analysts said that the company’s off-line expansion drive will likely strain profitability going ahead. Its depreciation and amortisation costs have already risen 18% year-on-year to ₹366 crore, while finance costs jumped 40% (y-o-y) to ₹85 crore in FY25, largely due to lease liabilities from offline centres, its offer document showed.
Yet a sharper 50% rise in its top line helped Physics Wallah narrow its net losses to ₹243 crore in FY25 from ₹1,131 crore a year earlier.
A long-term story
Hence, investors are treading carefully, noted Geojit Investments’ Anil. “The numbers are improving, but investors want proof that scale can translate to profit,” he said.
That caution partly stems from Physics Wallah’s commitment to affordability, which while socially relevant, also keeps margins thin.
“When your mission is affordability, profitability takes longer. And that’s what the market is factoring in,” Anil said.
For now, he sees Physics Wallah’s true value as a portfolio diversifier, a bet on India’s education transformation story. “The founders have kept skin in the game, the model is scalable, and the discipline is visible,” he added. “The market may take time to build confidence — as it’s a wait-and-watch approach to see how successfully the company can scale its offline model.”
(An earlier version of the story flagged slowing growth in error by comparing enrolments in Q1FY26 with all of FY25. An analyst quote was also updated in the story.)
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