A fast-growing edtech heads to the market
PhysicsWallah IPO chatter is heating up after the company filed papers with SEBI for a Rs 3,820 crore issue. The timing stands out because the business has scaled fast: revenue rose from Rs 744.32 crore in FY23 to Rs 2,886.64 crore in FY25. That’s not a gentle climb; it’s a step change that pushes the company into a different league of Indian edtech.
The company isn’t staying online-only. It’s been building out offline learning centers and adding more courses beyond test prep. Think multiple streams—exam prep, school support, skills, and other education products—so it isn’t tied to just one line of business. That diversification matters when exam cycles shift or when one segment slows.
What’s the money likely for? In deals like this, companies usually split proceeds between expansion (more classrooms, city launches), tech and content upgrades, marketing, and sometimes acquisitions. The exact mix will be clearer in final documents and during roadshows, but the direction is familiar to anyone who has tracked India’s consumer-tech listings.
The offline bet is the big swing. Opening and running physical centers brings real-world constraints: leases, faculty hiring, predictable class schedules, and the need to hit capacity. If centers fill up and students stick around, the economics improve fast. If seats go empty or teachers churn, costs show up immediately. That’s why utilization—how full a center is—becomes a key number to watch post-listing.
Revenue is racing ahead, but the question in every investor deck is the same: how much of that translates to steady cash flows? When growth is this quick, buyers usually look for simple checks—what does cash from operations look like, how seasonal is the business, and how much does growth depend on heavy marketing? With a hybrid model, you also want to see how online and offline feed each other without doubling costs.
The risk questions investors are weighing
A social media post from Zerodha prompted a burst of debate about “unique risks” tied to the business model. The post itself wasn’t available at the time of writing, but the investor chatter it sparked tracks with what usually comes up around edtech listings. Here are the themes people are likely to focus on as the IPO process moves ahead.
- Platform dependence: If a large chunk of discovery or traffic is driven by algorithmic platforms, the rules can change overnight. A tweak in recommendations can move sign-ups and sales, which shows up in conversion and marketing costs.
- Offline utilization: Centers look great at scale, but they need consistent footfall. Utilization, lease terms, and the pace of city rollouts matter. Expanding too fast can stretch teams; expanding too slowly can give rivals breathing room.
- Teacher and content moat: Star faculty bring students. Keeping top teachers, building a content pipeline, and maintaining classroom quality is a retention game. Any slippage here hits word-of-mouth quickly.
- Exam-cycle exposure: Test-prep demand spikes and dips. If too much revenue clusters around a few peak months, working capital and planning get tricky, especially when you’re also expanding offline.
- Pricing power: Discounts help scale. But investors will ask how sticky pricing is once promotions ease. The sign of a strong brand is the ability to hold prices without losing students.
- Regulation and compliance: Education is sensitive. Changes in rules around coaching, advertising, or data can add friction. Running physical centers also brings local compliance and safety norms into play.
- Customer acquisition cost (CAC): If CAC rises while retention flattens, unit economics can slip under the surface of headline growth. The healthier path is more referrals and repeat students.
- Competition: Big names, regional specialists, and new entrants all fight for the same students. The edge could be teacher quality, outcomes, or a smarter hybrid footprint—not just ad spend.
On valuation, the market will try to balance the breakneck growth with the costs of going hybrid. The price band and final structure will set the tone, but much will come down to clarity on margins, cash generation, and the cadence of center-level performance.
What’s next? SEBI’s review process, updates to the draft, and investor meetings. Expect more detail on use of proceeds, center expansion plans, and how the company is thinking about teacher retention and exam-season seasonality. If the company can show strong offline utilization and sticky learning outcomes, it strengthens the case for a large public listing in a sector that’s still finding its post-pandemic shape.
For retail investors watching the buzz around the Zerodha post and the social chatter, the filter is simple: focus on the data that will be disclosed—cash flows, unit economics, retention metrics, and offline utilization. That’s where the real story will show up.