Physics Wallah IPO: ₹3,480 Cr Edtech Debut Faces Skeptical Market! Will Affordability Win?

Physics Wallah, an education technology company, is set to launch its Initial Public Offering (IPO) worth ₹3,480 crore. The shares will be offered in a price band of ₹103 to ₹109 per share. This IPO aims to gauge investor interest in the "affordable edtech" sector, a segment that is currently facing cautious sentiment. The grey market premium (GMP) for Physics Wallah's shares has significantly dropped, indicating a modest expected listing gain of only 4-5%. This cautious mood is partly attributed to the "Byju's hangover" in the edtech space and a general wariness towards loss-making startups.

Physics Wallah's business model emphasizes affordability, targeting the vast majority of students who seek cost-effective education. The company operates a hybrid model, combining online courses with a growing network of offline centers (Vidyapeeth and Xylem Learning). While online learning drives volume, the offline segment is becoming a key growth lever due to its higher average revenue per user (Arpu). The company plans aggressive offline expansion, earmarking IPO proceeds for new centers.

Despite reporting a net loss of ₹243 crore in FY25, Physics Wallah's operating revenue grew by 50% year-on-year to ₹2,887 crore in FY25, with operating profit nearly trebling. However, concerns remain about moderating growth momentum, particularly a sequential decline in online users, and rising employee and operational costs associated with expansion.

Impact: This IPO is crucial for the Indian edtech sector, as its reception will signal investor confidence in affordable education models and companies not yet achieving profitability. A successful IPO could boost sentiment for similar ventures, while a subdued response might reinforce caution. Rating: 7/10

Difficult terms: IPO (Initial Public Offering): The process by which a private company offers its shares to the public for the first time to raise capital. Grey Market Premium (GMP): An unofficial indicator of demand for an IPO, reflecting the price at which shares are traded before their official listing. Edtech: Education Technology, referring to the use of technology to deliver educational services. Valuation: The estimated monetary worth of a company, often determined by its financial performance, assets, and market potential. Arpu (Average Revenue Per User): A metric used to calculate the revenue a company generates from each active user over a specific period. FY25 (Fiscal Year 2025): The financial year ending March 31, 2025. RHP (Red Herring Prospectus): A preliminary document filed with regulators that contains detailed information about a company planning an IPO.