PhysicsWallah Ltd IPO: Aiming to Scale New Heights in India’s Ed-Tech Space – Should You Subscribe?

At a Glance

Company and its Business Operations

PhysicsWallah Ltd., founded in 2020, is a leading ed-tech company providing online and offline coaching for competitive exams like JEE, NEET, UPSC, GATE, MBA, and CA. Originally launched as Physicswallah Private Limited, it was renamed Physicswallah Ltd. after becoming a public company in 2025. The company offers online courses, study materials, and live coaching through its app and website. Key milestones include launching Vidyapeeth and Pathshala centers across India, with subsidiaries in the UAE, and establishing a base of 10 million+ YouTube subscribers.

Industry Outlook

The Indian ed-tech sector has witnessed rapid growth, with an increasing number of students opting for online coaching for competitive exams. The total addressable market (TAM) for this sector is expected to grow at a CAGR of 30-35% over the next few years, reaching a market value of over Rs 50,000 crore by 2027. The global growth of online education, combined with advancements in technology and government support for digital education, positions India as one of the largest markets for online learning.

Objects of the Issue

The proceeds from the issue will be utilized for various purposes. The Fresh Issue will raise Rs 3,100 crore, which will be used to fund the expansion of digital content, marketing, and research initiatives. The Offer for Sale will amount to Rs 380 crore, with promoters divesting a portion of their holdings. Additionally, the company has allocated up to Rs 7 crore under the Employee Reservation Portion, which will be reserved exclusively for eligible employees.

SWOT Analysis

Strengths: PhysicsWallah has a strong brand presence in India’s education sector, with a large user base and a wide range of courses for various competitive exams. The company has established digital platforms with significant reach, enhancing its market position.

Weaknesses: The company’s heavy dependence on the Indian market limits its international diversification, making it vulnerable to local market fluctuations. It also faces intense competition from well-established ed-tech players in the industry.

Opportunities: PhysicsWallah has plans to expand into international markets, including subsidiaries in the UAE, and aims for further global outreach. Additionally, there is significant growth potential through AI-powered education tools like “AI Guru,” which can enhance its offerings.

Threats: The company faces potential regulatory challenges in the education sector, which could impact its operations. Additionally, increasing competition from newer, more tech-driven ed-tech companies poses a threat to its market share.

Key Numbers & Competitive Strengths

• 4.13 million unique online users and 0.33 million students enrolled in offline centers.
• Average collection per user: Rs 3,930.55 as of June 30, 2025.
• Offers multiple courses across 13 education categories.
• 303 offline centers as of June 30, 2025.
• 6,267 faculty members as of June 30, 2025.
• 18,028 employees as of June 30, 2025.
• 4,382 books published.
• 4.46 million paid users in FY25, with a 59.19% CAGR from FY23 to FY25.
• Strong presence across many education categories in India, with courses available through various channels.
• Proprietary technology enhances the learning experience for students.
• Experienced faculty, quality content, and a well-structured curriculum.
• A highly experienced management team, led by visionary founders.

Financial Performance

Outlook & Relative Valuation

The ed-tech sector is experiencing robust growth, driven by the rise of online education and the increasing demand for exam preparation. With its strong brand and expanding user base, PhysicsWallah is positioned well for long-term success. While its diverse offerings, use of AI tools, and plans for expansion support its current market valuation, the company’s short-term financials raise concerns. It is currently loss-making, with negative profitability and no clear path to sustained profit in the near future. Moreover, there is limited relative valuation data available, as there are no direct peers of similar size and scale in the market.

In terms of valuation metrics, the company currently trades at a Price to Book Value of 14.10x, a Market Capitalization to Sales ratio of 10.80x, and an EV/EBITDA multiple of 100.76x. Given that the company is presently loss-making, these elevated multiples underscore a significant premium being placed on future growth expectations rather than current financial performance.

Considering these factors, while PhysicsWallah holds strong long-term growth potential, its lack of profitability and high valuation multiples at present make it a less attractive investment opportunity in the near term.

Recommendation

Recommendation: Avoid.
While PhysicsWallah is operating in a high-growth sector with promising potential, its financials reflect a lack of profitability and no clear path to near-term profits. Given the current negative valuation and the absence of relative valuation data, it's advisable to avoid the stock for now, especially for those seeking more stable returns in the short term.