Physicswallah’s ₹3,820 Crore IPO: Growth Story or Competitive Gamble?

Introduction:

The much awaited Physicswallah IPO will open on Nov 11, 2025 and close on Nov 13, 2025. The Physicswallah IPO is a book build issue of ₹3,480 crores. The issue consists of a fresh issue of ₹3,100 crores and an offer for sale amounting to ₹380 crores. The shares are expected to be listed on Nov 18, 2025. Investors such as Westbridge and Hornbill Capital will offload their stakes in the company through the offer for sale. The Upcoming IPO marks a milestone for the ed-tech company and will help make the company financially fit for the offline expansion stage.

Industry Overview

A significant uptick in the adoption of supplemental coaching and skill building programs has been seen not just in Tier 1 cities, but even in Tier 2 cities and beyond. Enhanced internet connectivity, increased access to smartphones, and the proliferation of education contents in regional language are further enabling students in these cities to bridge historical gaps in educational access and quality. Owing to these developments, the test prep industry in India has become a ₹2 trillion industry and one of the most competitive markets in the world.

Tier 2 and beyond cities contributed ~37% to the test preparation market in Fiscal 2025. It is projected to become the largest market segment at ~44% by Fiscal 2030. The rising demand in these cities is due to aspirational parents and students seeking affordable and accessible solutions to enhance career opportunities. Online contribution to overall test preparation market is projected to become ~26% by Fiscal 2030, with a market size of ₹500-550 billion (US$ 6-6.5 billion).

Objective of the IPO

The purpose behind the Physicswallah IPO is to fund offline expansion, tech infrastructure, and marketing. If successful, the listing will help position Physicswallah to capitalise on the expanding competitive exam market and further its reach into new segments.

About Physicswallah and Its Dominance

Founded in 2020, Physicswallah is among the fastest-growing education technology companies in India. The company offers test preparation courses for competitive exams like JEE, NEET, UPSC, GATE, CUET, and Chartered Accountancy. It also offers upskilling programmes for professionals.

Physicswallah operates through three delivery models: online, offline, and hybrid.

What’s interesting is the growth of Physicswallah’s flagship YouTube channel, ‘Physicswallah – Alakh Pandey.’ It had around 13.7 million subscribers as of 15 July 2025. Not only that, out of the total 2,063 social media channels handled by the company as of 30 June, 2025, there were around 98.8 million subscribers. The subscriber base grew at a CAGR of 41.8% between FY23 and FY25.

Besides subscribers, the company saw a significant increase in downloads of its core mobile app meant for JEE/NEET, UPSC, GATE, and SSC. By June 2025, cumulative downloads stood at 71.25 million.

Physicswallah also operates 14 other apps for specific courses. What makes the company stand out among its peers is its affordable pricing. For example, its online courses for JEE and NEET are priced between ₹2,199 and ₹4,800, compared to ₹63,000–₹80,000 charged by peers.

Here is a quick insight into Physicswallah’s growth in both online and offline hybrid models:

• Among all the YouTube channels that Physicswallah has, the total views exceed 22.85 billion.

• The company reported a daily active users growth from 0.93 million in FY23 to 2.7 million in FY25.

• As of 30 June 2025, Physicswallah has 303 offline centres across 152 cities in India and the Middle East, but in FY23, the total number of offline centres was just 28. The number of centres saw a CAGR of 165.9%.

• Physicswallah has opened 155–165 new centres during 2022–2023. It has achieved offline enrolments of 3–3.5 lakh paid students.

Revenue Growth Overview

Physicswallah’s total revenue from operations stood at ₹28,866.43 million in FY25, up from ₹19,407.10 million in FY24 and ₹7,443.18 million in FY23. The figures show a CAGR of 96.93% between FY23 and FY25. Here is a breakdown of revenue by source (₹ million):

Channel-Wise Revenue Breakdown

As discussed, Physicswallah operates offline, online, and hybrid models. Here is the contribution of each to the company’s revenue (in crores).

Other Key Metrics

• The total average collection per user from its online channel increased from ₹3,106.81 in FY23 to ₹3,682.79 in FY25. In contrast, average revenue per user from offline channels rose from ₹34,467.15 to ₹40,404.56 during the same period.

• Though smaller, product revenue, mainly from books, stationery, and tablets, grew more than threefold between FY23 and FY25.

Profit Story for Physicswallah

Physicswallah’s financials reveal a mixed but insightful trend in profitability over the last three fiscal years. The company reported net losses (attributable to equity holders) of ₹814.47 million in FY 2023, ₹10,404.30 million in FY 2024, and ₹2,158.96 million in FY 2025. While there is a noticeable widening of losses in FY 2024, you can observe a partial recovery in FY 2025.

Margin Trend of Physicswallah

FY2023 was the transition stage of the company and was marked by increased operating scale and integration of new learning platforms. The primary reasons behind the dip in FY23 was high employee costs, initial investments in tech infrastructure, and limited offline presence as the company was planning for post-pandemic learning modes.

In FY24, Physicswallah posted a one-time exceptional impairment of goodwill and intangible assets totalling ₹1,012 million. The reporting was associated with the underperformance of its subsidiary, iNeuron Intelligence Pvt. Ltd. The company also recognised a fair value loss of ₹8,166.41 million on financial instruments, which further affected the bottom line.

The company faced losses mainly due to difficulties in merging newly acquired businesses, along with higher finance costs of ₹650.57 million and amortisation expenses of ₹2,982.91 million for its intangible assets.

FY2025, which was considered a recovery phase, benefited from a drop in exceptional and non-cash losses. This included a steep decline in fair value losses on financial instruments, which reduced from ₹8,166.41 million in FY2024 to ₹1,146.32 million.

The company also saw efficiency improvements following the complete acquisition of iNeuron. The result? Better consolidation and more stable performance from its subsidiaries, like Utkarsh Classes & Edutech Pvt. Ltd.

In FY25, the company also saw a decline in non-controlling interest losses, which stood at ₹273.62 million compared to ₹907.00 million in FY24. This shows a decent contribution from group companies.

Risk Factors to Consider

• There is high competition in India’s test-prep and upskilling market. The market size for test preparation is around ₹1.1 trillion in FY25 and is projected to reach ₹1.9–2.1 trillion by FY30. Larger education segments also show multi-trillion-dollar sizes, creating room for many competitors and consolidation pressures.

• Companies like Physicswallah rely heavily on free or third-party platforms such as YouTube. This dependence makes it easier for competitors to attract students at lower costs and also exposes the business to sudden platform-related changes.

• The company plans to expand its offline and hybrid centres, exposing it to cost overruns, labour or equipment shortages, and regulatory delays. Getting enrolments in new centres is also a challenging task, especially in mid-session.

For Investors

Physicswallah is known for reaching students across the country through both online and offline platforms. With an impressive centre growth rate of about 165.92% between FY23 and FY25 and a strong online presence with lessons in several regional languages, the company shows how deeply it has connected with learners across India. Rather than chasing quick profits, the company chose to focus on making education affordable by using modern technology, like its “AI Guru” learning tool and budget-friendly test preparation courses.

It has also expanded into government exam coaching through Utkarsh Classes and skill development programmes, which adds strength to its overall ecosystem.

Still, there are some challenges that investors must not overlook. The company has high advertising costs of around 10–14% of revenue, and it depends heavily on its brand image. Moreover, its offline model is relatively new, and fast acquisitions like Xylem and iNeuron could create cost and integration hurdles.

Although India’s education market is expected to touch ₹15–16 trillion, Physicswallah’s future relies on its operations and cost management.