Is PhysicsWallah Ready To Step Up?

It’s been a blockbuster week for startup IPOs. Lenskart and Groww wrapped up their public listings, together pulling in nearly INR 14,000 Cr. Hot on the heels, Pine Labs hit the markets with its INR 3,900 Cr IPO.

But now, all eyes are on edtech unicorn PhysicsWallah, which is gearing up for its big moment. With a price band of INR 103–INR 109 per share, the company will open its IPO on Tuesday, marking the final stretch of its journey to Dalal Street.

A quick recap: The edtech major filed its RHP earlier this week for an INR 3,480 Cr public listing, comprising a fresh issue of shares worth INR 3,100 Cr and an OFS of up to INR 380 Cr. The promoters of the company, Alakh Pandey and Prateek Maheshwari, have slashed their OFS from INR 720 Cr to INR 380 Cr, signalling that they want to have more skin in the game.

Against this backdrop, let’s understand the merits and, of course, demerits that the edtech commands when it is all decked up to walk down the D-Street aisle.

The Brave Offline Bet

What stands out about the startup is its swift business pivot. In just a few years, PW has evolved from an online-first venture into a largely offline player.

However, at a time when much of India’s edtech ecosystem is downsizing, consolidating, or struggling to sustain scale, offline expansion has become central to PW’s growth narrative.

And the bet is brave.

This is also probably why the edtech unicorn has stirred up a storm in the grey market. Grey market indicators peg the expected listing price between INR 118 and INR 120, implying a 6-9% listing gain — modest but notable amid a largely subdued IPO climate.

“The company is cash flow positive, which means it is a cash-rich business. It should get a positive subscription interest,” said senior market analyst, Dinesh Saney.

Obviously, analysts are upbeat.

But behind the glitter of optimism lies the brand’s strong mass appeal and the deep trust and following that cofounder Alakh Pandey has built over the years. Also, given the fact that none of the existing investors are offloading their shares in the IPO only adds to the sense of confidence surrounding the company.

Yet, despite all rainbows and sunshine, an unsettling valuation conundrum for PhysicsWallah is hard to ignore. At the upper end of its price band, PhysicsWallah is targeting a valuation of about $3.5 Bn — nearly 25% above its last known valuation and around 10.5X its FY25 revenue.

There is a disconnect between its steep valuation and losses, which widened 78% to INR 125.5 Cr in Q1 FY26 from INR 70.5 Cr in the same quarter last year.

But, the founders appear nonchalant, even calling PW’s valuation ‘infinite’ at a press conference. Quite brave, huh? So, what gives them this confidence?

To be fair, the company’s growth metrics have been strong. Revenue has quadrupled over the past two years, with an impressive CAGR of 96.9% between FY23 and FY25, as per the RHP.

Much of this surge stems from its offline pivot, which is fuelling growth but is taking a heavy toll on profits.

Offline Growth: A Double-Edged Sword?

In its RHP, PW disclosed that it has earmarked nearly INR 1,088 Cr, about 35% of its IPO proceeds, for offline expansion. This would include setting up new coaching centres and covering the lease payout.

In Q1 FY26, PW generated more revenue from offline operations than online. It also added 105 new centres and plans to expand into 10 additional cities, including Akola in Maharashtra, Muzaffarpur and Dhanbad in Bihar, and Bathinda in Punjab.

In Q1 FY26, the startup spent INR 418.4 Cr in setting up coaching centres compared to INR 377.7 Cr in the whole of FY25.

For a company chasing revenue growth, the math is simple: a student in an offline classroom typically pays 10X more than an online course. Moreover, the setup, rental, infrastructure, and staffing costs of offline centres can only be balanced by charging more from students.

Despite everything, the offline strategy comes with structural challenges, and industry experts believe that the model can only work sustainably in a handful of cities, including Delhi NCR, Patna and Kota, where demand density justifies the cost.

Besides, PW’s foray into smaller tier II and tier III towns is still uncharted territory, and the real test of its success will play out over the next year.

 

An Uphill Battle Ahead For PW

Another major concern for the edtech major is student retention. To fill classrooms, PW has relied heavily on discounts, a tactic that drives enrolments but risks churn once incentives fade.

Despite spending nearly half of its FY25 advertising budget in Q1 FY26 alone, the company saw 33,769 student dropouts versus 46,019 dropouts in the entire FY25. The data is alarming, especially when PW plans to allocate an additional INR 710 Cr from IPO proceeds toward advertising.

The uneven equation of burning cash extensively and falling return on investment (RoI) in terms of student retention makes us wonder if PW’s offline bet can break even or emerge profitable without sustained discounting.

The analogy is written on the wall — an offline centre typically takes 12-24 months to turn profitable, and given the current pace of expansion, profitability may remain under strain for several quarters.

Then, the coaching behemoth has a toxic relationship with its faculty. Attrition climbed 30% in Q1 FY26 alone from 27% last fiscal, while the number of grievance tickets raised against faculty has already reached nearly half of last year’s total. Such instances impact both classroom consistency and brand credibility, two critical pillars of PhysicsWallah’s offline push.

Then, PW’s heavy reliance on JEE, NEET and foundation courses adds another layer of complexity, especially when it aspires to enter into new segments. In Q1 FY26, the aforementioned segments contributed 57% of total student enrollment. This dependence raises questions about the company’s ability to scale beyond its strength.

All in all, PhysicsWallah’s offline expansion marks a bold departure from its digital roots, a move that could either cement its market leadership or test the limits of its fast-scaling model. The next 12 months will be crucial in determining whether its offline gamble pays off or stretches the company too thin.

Edited By Shishir Parasher

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