PhysicsWallah IPO eyes ₹3,820 cr to scale AI, cloud, and learning

PhysicsWallah Limited, the Noida-based edtech unicorn that transformed YouTube classes into a multi-crore education empire, has submitted its Updated Draft Red Herring Prospectus (UDRHP) to SEBI. The company is planning to raise ₹3,820 crore through an IPO, and this makes it one of the most awaited listings in the new-age education sector in India.

The issue will consist of a fresh issue of ₹3,100 crore and an offer-for-sale (OFS) of  ₹720 crore by co-founders Alakh Pandey and Prateek Boob, who will cash out shares worth ₹360 crore each. The current shareholders are 40.35% (each), and the promoters have an 82.3% share.

Among institutional investors, GSV Ventures' Fund III owns 2.85%, Hornbill Capital Partners owns 4.42%, and WestBridge Capital owns 6.41%. The shares of Lightspeed Opportunity Fund and Setu AIF Trust are 1.79% and 1.39%, respectively. The promoters and these investors stand to gain as PhysicsWallah goes the public route.

The proceeds highlight the company’s focus on technology and scale:

• ₹200.1 crore server and cloud infrastructure.

• ₹710 crore for marketing and visibility.

• ₹460.6 crore in new offline and hybrid centre fit-outs.

 • 548.3 crore lease payment on centres already in place.

 • ₹47.2 crore to develop subsidiary Xylem Learning.

• ₹33.7 crore of Utkarsh Classes & Edutech.

• A bid to increase stake in Utkarsh by 26.5 crore.

The budget reflects the twofold goal of PhysicsWallah, that is, to strengthen its digital infrastructure and, at the same time, to increase its offline and hybrid presence.

The 2025 year-on-year revenue increased 49 percent to ₹2,886.6 crore, or ₹1,940.7 crore, respectively, representing a two-year CAGR of approximately 97 percent. The net loss has reduced to ₹243.3 crore in FY25 compared with an excessive ₹1,131 crore in FY24, in part, as an earlier net charge of ₹816.6 crore on preference shares was not determined on a fair-value basis, as shown in the difference between net earnings and other comprehensive income.

However, costs remain a drag. Overall costs were ₹3,264.8 crore in FY25, with the employee benefits component of ₹1,401.2 crore (almost half the topline), ad expenses of ₹276.2 crore, and depreciation of ₹366.4 crore. Profitability, at this, is elusive.

Offline Push To Reshapes Business Model

The 198 centres of PhysicsWallah in 109 cities generated ₹1,351.9 crore in FY25, almost comparable to ₹1,404 crore raised through online. Paid users increased to 4.46 million, whereas average revenue per offline student was 40,405. However, growth was biased towards lower-priced streams such as civil services and defence, and pulled overall ARPU.

Offline boom has also caused expenses- faculty recruitment, lease fees, and reliance on some cities such as Delhi-NCR, Patna, Calicut, and Kota.

Risks That Could Test the IPO

The company faces multiple challenges:

• Subsidiary losses: Xylem Learning, Utkarsh Classes, and Knowledge Planet all registered losses in the FY25.
• Attrition of faculty: This is 36.5% in FY 25 (compared to 45.3%), though high. Competitors would steal teaching talent.
• Student attrition: The number of student dropouts in FY25 is more than 46,000; the risk of refund requests.
• Key-man risk: DRHP clearly states that it relies on the founders, Alakh Pandey and Prateek Boob.

Teaching Moments Ahead PhysicsWallah, backed by WestBridge, Hornbill, and GSV Ventures, has been aggressively growing its presence offline and has added new verticals. But increasing labour expenses, turnover, and unprofitable subsidiaries continue to drag on its balance sheet.

To the investors, PhysicsWallah's IPO is both a hope and a danger. One of the most anticipated initial public offerings (IPOs) in India's edtech sector is PhysicsWallah. Revenues are increasing quickly, but ongoing losses and growing expenses are still a worry. As it expands its hybrid learning model, the company's ability to balance rapid development with long-term profitability will determine its next chapter.  

The issue has led managers in Kotak Mahindra Capital, J.P. Morgan India, Goldman Sachs (India) Securities, and Axis Capital.