Mumbai: The latest startup to IPO, online test prep company PhysicsWallah, has seen a blockbuster response, with the final day of bidding seeing the IPO get oversubscribed 2 times even as interest was thin on the first two days. The issue, worth ₹3,480 crore consists of a fresh shares worth ₹3,100 crore and an Offer For Sale (OFS) of upto ₹380 crore. According to Investorgain, the company’s GMP, the metric used to measure investor confidence, is currently zero, while then highest was ₹9 a week ago.
The company, built around the YouTube tutor Alakh Pandey’s teaching charisma, is being seen with awe and concern, in equal measure. The company, which is now adopting the omnichannel approach to teaching, is looking to expand aggressively across the country, with the company building on Alakh’s strong goodwill that he’s managed to create from the days he started uploading his free physics lectures on YouTube in 2016.
Fast forward to today, PhysicsWallah has already raised ₹1,563 crores before the IPO, with the hopes of expanding its large format coaching ‘Vidyapeeth’ centers and its smaller ‘Paathshaala’ centers acoss the country. Currently, it has about 198 centers across 109 cities.
Experts have raised several concerns about the company, especially since its losses have ballooned to ₹1,131 crores in 2024, even as the breakeven point could come soon, but not yet. Meanwhile, the company has been ambitiously growing its reach through acquisitions, including OnlyIAS for civil service prep, Xylem Learning in Kerala and Utkarsh Classes in Rajasthan. All of this has been done to capture a bigger slice of the almost ₹1 lakh crore exam prep market, which has been highly fragmented through local coaching centers but is growing in double digits.
“While the company continues to deliver strong revenue growth and enjoys high brand recall, profitability remains constrained by rising competition and elevated scaling costs. Hence, we assign a ‘Neutral’ rating, recommending investors to wait for clearer earnings visibility before taking a long-term position,” leading brokerage AngelOne said in a report, highlighting the loss-making nature of the business.
Moreover, the company has been facing high attrition, with almost half of its leading teachers leaving in 2024. The company has been forced to ‘poach’ teachers from rival companies, and it has faced the same issue with its staff as well.
In an interview with Moneycontrol, PhysicsWallah’s co-founder Prateek Maheshwari has assured of reaching profitability soon, stating that cash from operations have improved by 100% in FY25. “We’ve strengthened topline, bottomline, and student experience. Education is a negative working capital business — students pay upfront — so profitability isn’t a challenge,” he claims.
Now that the issue is subscribed, many investors are hoping for Alakh and Prateek’s ambitions to turn into profits, even as an earlier failure- Byju’s remains a stark reminder of how things could go if your ambitions cloud your judgement.
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