PHYSICSWALLAH LIMITED IPO Explain

PhysicsWallah IPO Overview

India’s largest student community edtech raising ₹3,480 cr (₹3,100 cr fresh + ₹380 cr OFS by founders). Price: ₹103-109. Lot: 137 shares (₹14,933 min). Funds for offline expansion (303 centres), tech (₹200 cr), marketing (₹710 cr), subsidiaries. 98.8M YouTube subscribers, 4.46M paid users, affordable pricing (₹4,500 JEE vs ₹75K competitorsListing: BSE/NSE Nov 18. Lead: Kotak, JPM, Goldman, Axis. Turned loss-making after unicorn funding. Competes with Unacademy, Allen, Vedantu.

IPO DETAILED INFORMATION

Issue Details

Parameter	Details
IPO Type	Mainboard
IPO Open Date	11 November 2025 (Tuesday)
IPO Close Date	13 November 2025 (Thursday)
Anchor Investor Bidding	10 November 2025 (Monday)
Allotment Date	14 November 2025 (Friday) – Expected
Credit to Demat	17 November 2025 (Monday) – Expected
Refund Initiation	17 November 2025 (Monday) – Expected
Listing Date	18 November 2025 (Tuesday) – Tentative
Price Band	₹103 – ₹109 per share
Face Value	₹1 per share
Lot Size	137 shares
Min Investment (Retail)	₹14,933 (1 lot of 137 shares at upper band)
Max Investment (Retail)	₹1,94,009 (13 lots of 1,781 shares)
sHNI Investment	₹2,08,942 (14 lots / 1,918 shares)
bHNI Investment	₹10,21,678 (68 lots / 9,316 shares)
Issue Size	₹3,480 crore total
Fresh Issue	₹3,100 crore (89.1%) – 28,44,03,669 shares
Offer for Sale (OFS)	₹380 crore (10.9%) – 3,48,62,385 shares by founders
Total Shares Offered	31,92,66,054 equity shares
Listing	BSE & NSE (Mainboard)
Post-Issue Market Cap	~₹12,000-13,000 crore (at upper price band)
Employee Discount	₹10 per share

Issue Break-up

Category	Allocation
QIB (Qualified Institutional Buyers)	75% of Net Offer (unusually high)
NII (Non-Institutional Investors)	15% of Net Offer
Retail Individual Investors	10% of Net Offer (lower than typical 35%)
Employee Reservation	₹10 discount on issue price

Note: Heavily skewed toward institutional investors with only 10% retail allocation – similar to Groww IPO structure.

Selling Shareholders (OFS ₹380 crore)

Founders Selling 3,48,62,385 shares:

1. Alakh Pandey – Co-founder & face of PhysicsWallah (partial exit)
2. Prateek Maheshwari (Boob) – Co-founder (partial exit)

Note: OFS represents 10.9% of total issue. Majority (89.1%) is fresh capital for company.

Objects of the Issue (Fund Utilization)

Fresh Issue Proceeds (₹3,100 crore) will be used for:

1. Capital Expenditure – ₹1,208.7 crore total:
   • Fit-outs of New Offline/Hybrid Centres – ₹460.55 crore (opening new learning centers)
   • Lease Payments for Existing Offline/Hybrid Centres – ₹548.31 crore (operated by company)
   • Server and Cloud Infrastructure – ₹200.10 crore (technology upgrades, scalability)
2. Investment in Subsidiaries – ₹75.16 crore:
   • Xylem Learning Private Limited – ₹47.22 crore for fit-outs of new offline centers and hostels, ₹ 27.94 crore for lease payments
   • Utkarsh Classes & Edutech – ₹26.53 crore to increase stake (currently 50.06%), ₹33.73 crore for lease payments
3. Brand Marketing & Business Promotion – ₹710 crore (largest single allocation – 22.9%)
   • Scaling brand visibility
   • Customer acquisition across geographies
   • Digital and traditional marketing campaigns
4. General Corporate Purposes – Balance amount (~40%)
   • Including unidentified inorganic acquisitions
   • Working capital requirements
   • Strategic initiatives

Strategic Focus:

• Rapid offline expansion: From 303 centres to aggressive pan-India footprint
• Hybrid model strengthening (55:45 offline-online revenue split)
• Technology infrastructure for scaling to millions of users
• Brand building to compete with established players (Allen, Unacademy, Vedantu)
• Subsidiary consolidation (Xylem, Utkarsh Classes)
• Possible acquisitions (eyeing Drishti IAS per reports)

OFS Proceeds (₹380 crore):

• Goes to founders Alakh Pandey and Prateek Maheshwari
• Partial liquidity for early hard work
• CEO Alakh still retains significant stake post-IPO

Lead Managers & Registrar

Book Running Lead Managers (BRLMs):

• Kotak Mahindra Capital Company Limited
• J.P. Morgan India Private Limited
• Goldman Sachs (India) Securities Private Limited
• Axis Capital Limited

Registrar:

• MUFG Intime India Private Limited (Link Intime India Private Limited)
• Phone: +91-22-4918 6270
• Website: https://in.mpms.mufg.com/Initial_Offer/public-issues.html

Promoters & Management

Key Founders:

1. Alakh Pandey – Founder, Face of PhysicsWallah, YouTube Star
   • Started YouTube channel “Physics Wallah” in 2014 (free teaching)
   • Main channel has ~13.7 million subscribers (as of July 2025)
   • IIT aspirant who couldn’t crack entrance but became educator icon
   • From humble Prayagraj background (sold house during childhood hardships)
   • Co-founded company with Prateek in 2020
2. Prateek Maheshwari (Boob) – Co-founder
   • Business and operations head

Marquee Investors:

• WestBridge Capital (led $100M unicorn round 2022)
• Lightspeed Venture Partners
• Hornbill Capital
• GSV Ventures

Company Background:

• 2014: Alakh Pandey started free YouTube physics teaching
• 2020: Formally founded PhysicsWallah (PW) with Prateek Maheshwari
• June 2022: Raised $100M, became India’s 101st unicorn at $1.1B valuation
• 2023-24: Acquired Xylem (Kerala presence), Utkarsh Classes (Rajasthan, UP), PW Skills (upskilling), expansion into Middle East
• 2025: Eyeing $500M-1B IPO

Company Contact:

• Registered Office: 3rd Floor, Vaishnavi Tech Park, South Tower, Sarjapur Main Road, Bellandur, Bengaluru – 560103, Karnataka
• Phone: +91-80-6960-1300
• Email: [email protected]
• Website: www.pw.live

COMPANY OVERVIEW

Establishment & Background:

• Founded in 2020 (formally incorporated) by Alakh Pandey and Prateek Maheshwari
• YouTube channel “Physics Wallah” started in 2014 – organic grassroots beginning
• Industry: Education Technology (EdTech) – Test Preparation & K-12 Learning
• Headquarters: Bengaluru, Karnataka
• Origin story: Alakh Pandey’s free YouTube physics teaching gaining cult following among IIT-JEE/NEET aspirants
• Bootstrapped till 2022, then raised $100M unicorn round at $1.1B valuation

Business Model:

• Omnichannel education platform offering affordable test preparation and K-12 courses through online, offline, and hybrid formats
• Three delivery channels:
  1. Online – Social media (YouTube 98.8M subscribers across 206 channels), website, mobile apps (free + paid courses)
  2. Tech-Enabled Offline Centres (PW Vidyapeeth) – Faculty conducts live classes in physical centers
  3. Hybrid Centres (Two-Teacher Model) – Students attend live online class at physical center with on-ground faculty for doubt resolution and revision
• Product Portfolio:

• Test Preparation: JEE (₹4,500), NEET (₹4,500-5,000), UPSC (₹18,000), GATE, other government exams
• Foundation Courses: Class 6-12 students
• Upskilling: Data science, finance, software development (via PW Skills)

• Revenue Model: Course subscriptions, offline center fees, hostel charges (216 hostels through Xylem and third-party)
• Value Proposition: Ultra-affordable quality education democratizing access vs elite coaching institutes charging ₹75,000-110,000

Market Position:

• Largest student community in India – Main YouTube channel ~13.7M subscribers (July 2025)
• 98.8 million YouTube subscribers across 206 channels (June 2025) – CAGR 41.80% (FY23-25)
• Top 5 education companies in India by revenue (FY25: ₹3,039 crore)
• 4.46 million paid users in FY25 – CAGR 59.19% (FY23-25)
• 303 offline centres and schools across India (as of June 2025)
• Most affordable test prep courses: JEE ₹4,500 vs top-5 players ₹75,000; UPSC ₹18,000 vs ₹110,000
• Positioned as disruptor vs expensive legacy brands (Allen, FIITJEE, Aakash) and cash-burning edtech unicorns (Byju’s, Unacademy, Vedantu)

Operations:

• 303 offline centres across India (as of June 2025) – Rapid expansion from initial Kota base
• 216 residential hostels (192 Xylem brand, 24 Vidyapeeth through third-party)
• 6,200+ faculty members and 5,000+ non-teaching staff
• Geographic presence: Strong in North India (Kota, Patna, Noida, Lucknow, Chandigarh, Delhi), expanding to East, West, and South (via Xylem acquisition in Kerala)
• Subsidiaries:
  • Xylem Learning (Kerala presence, hostels)
  • Utkarsh Classes (50.06% stake – Rajasthan, UP)
  • PW Skills (upskilling, reskilling courses)
  • Middle East operations via partnerships
• Offline revenue: 48.75% (Q1 FY26), 46.83% (FY25) vs 37.77% (FY23) – Growing from pure online to hybrid model
• Student breakdown (Q1 FY26 online transacting users): NEET 26.64%, JEE 15.63%, Government Exams 12.33%, Foundation 17.61%

Company Strengths

1. Massive Organic Brand & Student Community – 98.8M YouTube Subscribers:
   • Largest student community in India with 98.8 million YouTube subscribers across 206 channels (June 2025)
   • Main channel “Physics Wallah-Alakh Pandey” has ~13.7 million subscribers
   • 41.80% CAGR in digital community (FY23-25)
   • Alakh Pandey’s personal brand creates unprecedented trust and relatability among students
   • Organic growth driven by word-of-mouth and free content – minimal marketing spend historically
   • Network effects: Large community attracts more students, validates quality
2. Affordable Pricing – Democratizing Education:
   • Most affordable test prep in India: JEE ₹4,500 vs competitors ₹75,000; UPSC ₹18,000 vs ₹110,000
   • Mission-driven approach making quality education accessible to middle-class and lower-income families
   • Addresses India’s price-sensitive education market where affordability is paramount
   • Creates massive TAM (Total Addressable Market) by expanding accessibility
   • Loyalty from students/parents who couldn’t afford traditional coaching
3. Exceptional Revenue Growth Trajectory:
   • Revenue increased 51% from ₹2,015 crore (FY24) to ₹3,039 crore (FY25)
   • 4.46 million paid users in FY25 – CAGR 59.19% (FY23-25)
   • 2.10 million unique transacting users online (Q1 FY26), 0.33 million offline enrollments
   • Demonstrates product-market fit and scalability
   • On track to become one of largest revenue-generating edtech companies
4. Hybrid Omnichannel Model – Best of Both Worlds:
   • 55:45 offline-online revenue split creating diversified model
   • Online provides scalability, low marginal cost, reach to remote areas
   • Offline (303 centres) provides tangible classroom experience, peer interaction, discipline
   • Hybrid (two-teacher model) combines benefits – live online class with on-ground doubt resolution
   • Resilience against pure-online fatigue and competition from free YouTube content
5. Industry Tailwinds – India’s Education Boom:
   • India education market: ₹15-16 trillion (FY25, ~5% of GDP), projected ₹24-26 trillion by FY30 (10% CAGR)
   • 30+ million students appear for competitive exams (JEE, NEET, UPSC, government tests) annually
   • Rising aspirations, nuclear families, working parents driving demand for structured test prep
   • Government’s focus on skill development and employability
   • Low penetration of organized test prep in Tier-2/3 cities offering runway
6. Experienced Visionary Leadership:
   • Alakh Pandey’s grassroots teaching credibility and personal brand
   • Understands student pain points (couldn’t afford expensive coaching himself)
   • Prateek Maheshwari brings business and operational expertise
   • Marquee investors: WestBridge, Lightspeed, Hornbill providing strategic guidance
   • Founder-led culture maintaining mission and frugality
7. Fast-Mover Advantage Post-Byju’s Collapse:
   • Byju’s implosion, Unacademy struggles create vacuum in edtech trust
   • PhysicsWallah positioned as “clean” alternative with affordable, transparent pricing
   • Competitors (Vedantu, Unacademy) struggling with losses, layoffs, slow growth
   • PW capitalizing on competition’s weakness to grab market share
   • Timing of IPO when PW is lone bright spot in battered edtech sector

Key Risks & Challenges

1. Loss-Making After Profitable Years – Sustainability Concerns:
   • FY25 loss: ₹243 crore (revenue ₹3,039 cr) vs FY24 loss: ₹1,131 crore (revenue ₹2,015 cr)
   • Turned loss-making after raising $100M unicorn funding (FY21, FY22 were profitable)
   • Losses driven by aggressive expansion, acquisitions (Xylem, Utkarsh, PW Skills), offline centre buildout, marketing
   • Path to profitability uncertain – IPO proceeds earmarked for further expansion (₹710 cr marketing, offline centres) not debt/cost reduction
   • 91% profit dip noted in FY23 post-unicorn round
   • Edtech graveyard littered with cash-burning unicorns (Byju’s, Unacademy) – PW following similar playbook?
2. Intense Competition from Established & Emerging Players:
   • Legacy offline giants: Allen, FIITJEE, Vidyamandir, Aakash, Sri Chaitanya with decades of brand equity and proven results
   • Edtech competitors: Unacademy, Vedantu (both trimming losses but still present), Byju’s remnants
   • Free content: YouTube channels, Khan Academy, unstructured learning competing for same audience
   • Low switching costs – students can change platforms between academic years
   • Teacher poaching: Competitors hiring away star faculty (reports of PW facing teacher attrition)
   • Price wars and discounting eroding margins
3. Heavy Dependence on Alakh Pandey’s Personal Brand:
   • Key person risk: Alakh Pandey IS PhysicsWallah – his face, voice, teaching style built the brand
   • Expansion into K-12, UPSC, MBA prep, upskilling where Alakh has little involvement as educator
   • Students enroll expecting “Alakh Pandey quality” but taught by other faculty
   • Brand dilution risk as company scales beyond Alakh’s physics/JEE-NEET core
   • Reputational damage if Alakh’s image tarnished or he exits/reduces role
4. Rapid Offline Expansion Execution Risks:
   • 303 centres operating (as of June 2025) with aggressive expansion plans (IPO proceeds for more)
   • Location selection risks: Wrong city/locality choices leading to low enrollment
   • Faculty hiring/retention: Need thousands of quality teachers – sourcing, training, retaining at scale challenging
   • Operational complexity: Managing hundreds of decentralized centres, compliance (local regulations, safety), quality consistency
   • Reports of 30-40% refund rates in Kota after initial batches due to faculty quality issues (per rival edtech CBO claims)
   • Fixed cost burden from offline centres (lease payments ₹548 crore from IPO) pressuring profitability
5. Regulatory & Compliance Uncertainties:
   • ₹3 crore refund claims and ~₹1 crore legal disputes pending
   • Education sector regulatory changes (teaching standards, content approvals, advertising norms)
   • Classroom management incidents (RHP mentions operational risks from student behavior)
   • Data privacy laws affecting student information handling
   • State-specific education board approvals for offline centres
   • Any adverse regulatory action catastrophic for reputation and operations
6. Acquisition Integration Challenges:
   • Multiple acquisitions: Xylem (2024), Utkarsh Classes (2023), PW Skills, Middle East partnerships
   • Edtech M&A graveyard: Byju’s struggled with WhiteHat Jr integration; Unacademy shut K-12 business post-acquisition
   • Founder retention: Early resignation of acquired company founders common (will Utkarsh, Xylem founders stay?)
   • Cultural integration: Merging different teaching philosophies, operational styles
   • Valuation risks: Overpaying for acquisitions that don’t deliver expected synergies
   • IPO proceeds earmarked for “unidentified inorganic acquisitions” – execution risk
7. Low Retail Allocation (10%) & Subdued GMP (₹4):
   • Only 10% IPO reserved for retail vs typical 35% – limited public participation
   • GMP of just ₹4 (3.7% gain) indicates muted market enthusiasm
   • Edtech investor skepticism post-Byju’s collapse
   • Heavily skewed toward institutional investors (75% QIB) – if institutions don’t subscribe fully, issue may underperform
   • Listing day disappointment risk if retail demand exceeds supply but overall subscription weak

Disclaimer: This information is based on publicly available sources including SEBI RHP filings and company disclosures. Investors should conduct their own research and consult with financial advisors before making investment decisions. Past performance is not indicative of future results. The company turned loss-making (₹243 cr FY25) after profitable years, operates in intensely competitive edtech sector with Byju’s precedent, and faces execution risks from rapid offline expansion. Grey Market Premium is unofficial and subdued (₹4).