PhysicsWallah to allocate Rs 710 crore for marketing from Rs 3,820 crore IPO

New Delhi: Edtech unicorn PhysicsWallah has filed an updated Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI), outlining plans to raise Rs 3,820 crore through an initial public offering (IPO), with Rs 710 crore earmarked for marketing initiatives to fuel aggressive brand expansion and student outreach across India. 

The filing on September 6, following SEBI's approval of the company's confidential pre-filing in July, marks a pivotal step for the Noida-based platform as it aims to become the first Indian edtech firm to list post the sector's post-pandemic reset.

The proposed IPO comprises a fresh issue of equity shares worth Rs 3,100 crore to bolster the company's expansion and an offer for sale (OFS) of Rs 720 crore by promoters Alakh Pandey and Prateek Boob, who will each offload shares valued at Rs 360 crore. 

Currently, the cofounders hold 40.35% stakes each, representing a combined 82.3% promoter holding, while public shareholders own 17.7%. 

Key investors include WestBridge AIF I (6.41%), Hornbill Capital Partner (4.42%), GSV Ventures Fund III (2.85%), Lightspeed Opportunity Fund (1.79%), and Setu AIF Trust (1.39%). The book-running lead managers for the IPO are Kotak Mahindra Capital Company, JP Morgan India, Goldman Sachs (India) Securities, and Axis Capital.

Of the fresh issue proceeds, PhysicsWallah has allocated the lion's share of Rs 710 crore specifically for marketing initiatives, underscoring its strategy to enhance visibility and penetrate deeper into Tier 2 and Tier 3 cities amid intensifying competition in the edtech space. 

Earlier in July, PhysicsWallah (PW) appointed Satish Sharma as its new Chief Marketing Officer (CMO).

This investment will support promotional campaigns, digital advertising, and partnerships to attract more students to its test-prep and upskilling courses. 

Additional funds include Rs 460.5 crore for fit-outs of new offline and hybrid centers, Rs 548.3 crore for lease payments on existing centers, Rs 200.1 crore for server and cloud infrastructure upgrades, Rs 47.2 crore for investment in subsidiary Xylem Learning (including Rs 31.6 crore for new centers and Rs 15.5 crore for leases and hostels), Rs 33.7 crore for Utkarsh Classes & Edutech's lease payments, and Rs 26.5 crore to acquire additional stake in Utkarsh Classes. The remainder will go toward unidentified acquisitions and general corporate purposes.

Founded in 2016 by Alakh Pandey as a YouTube channel and later joined by Prateek Boob, PhysicsWallah has evolved into a full-stack edtech powerhouse offering courses for competitive exams like JEE, NEET, GATE, and UPSC, alongside upskilling programs. 

It delivers content through online platforms (YouTube, apps, and website), tech-enabled offline centers, and hybrid models. 

As of July 15, 2025, its main YouTube channel "Physics Wallah-Alakh Pandey" boasts 13.7 million subscribers, while the overall network has 98.8 million subscribers as of June 30, 2025, growing at a compound annual growth rate (CAGR) of 41.8% from FY23 to FY25.

The platform now serves 4.46 million paid users, up from 3.63 million in FY24, with a CAGR of 59% between FY23 and FY25, and reaches 98% of Indian pin codes across 198 locations in 109 cities.

Financially, PhysicsWallah demonstrated robust growth in FY25, with revenue from operations surging 48.7% to Rs 2,886.6 crore from Rs 1,940.7 crore in FY24, driven by a 166% expansion in offline centres and a 97% CAGR in sales since FY23. 

Coaching services contributed Rs 2,498.6 crore, while product sales (books and merchandise) added Rs 259.2 crore. Offline revenue now accounts for 46.85% of the topline, nearly matching online at 48.6%, with average revenue per offline user rising to Rs 40,405. 

Net losses narrowed by 78.5% to Rs 243.2 crore in FY25 from Rs 1,131.1 crore in FY24, aided by the absence of a one-time Rs 816.6 crore fair value loss on compulsorily convertible preference shares from the previous year. 

Total income reached Rs 3,039.1 crore, with an EBITDA of approximately Rs 200 crore. Overseas revenue remains marginal at Rs 35.5 crore.

Strategic acquisitions like Xylem Learning, Utkarsh Classes, and a recent 40% stake in Sarrthi IAS (valued at Rs 250 crore) for UPSC preparation have strengthened its portfolio across 13 education categories. 

PhysicsWallah recently appointed three independent directors, Nitin Savara, Rachna Dikshit, and Deepak Amitabh, to comply with governance norms ahead of the IPO, and issued bonus shares in a 1:35 ratio.

However, the DRHP highlights risks including high dependence on test-prep categories, regulatory scrutiny in edtech, intense competition, and operational costs from offline expansion. 

Employee expenses, marketing, and depreciation remain key drags on profitability, though the firm expects FY25 to be its highest EBITDA year.