PhysicsWallah IPO Opens: Subscribe For Listing Gains, Says DRChoksey — Check Key Issue Details

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Deven Choksey Report

An Edtech company, founded by Alakh Pandey and Prateek Boob, headquartered in Noida, Uttar Pradesh, PhysicsWallah Ltd. launched its initial public offering today, on Tuesday, November 11 and will conclude on Nov. 13. The company has fixed the price band in the range of Rs 103 to Rs 109 per equity share.

Investors can place bids starting from a minimum of 137 shares and in multiples thereafter, which means it requires minimum investment of Rs 14,933 at the upper limit of the issue price.

The Rs 3480-crore IPO comprises of a fresh issue of 28.44 crore shares, valued at Rs 3,100 crore, and an offer-for-sale (OFS) of 3.49 crore shares, amounting to Rs 380 crore.

Kotak Mahindra Capital Company Limited, J.P Morgan India Private Limited, Goldman Sachs (India) Securities Private Limited, Axis Capital Limited are the book-running lead managers for the public issue while MUFG Intime India Private Limited is the registrar to the offer.

Objects of Issue

The offer consists of two main components: a fresh issuance of shares by the company and an offer for sale by its promoters.

Fresh Issue:

An issuance of new equity shares aggregating Rs 31,000.00 million.

Offer for Sale (OFS):

The promoters, Alakh Pandey and Prateek Boob, are offering existing shares aggregating up to Rs 1,900 million each, for a total OFS amount of Rs 3,800 million.

Peer Comparison

There are "no other companies in the education industry of the same size, scale and business model comparable to PhysicsWallah that are listed in India.

Unlisted peers like Allen Career Institute (Rs 3,244 crore revenue in FY24) and Aakash Educational Services (Rs 2,386 crore revenue in FY24) provide a point of reference for scale.

Risk Factors

• History of Losses and Negative Net Worth (Business Risk):

The company has incurred restated losses for Fiscals 2023, 2024, and 2025, as well as for the three months ended June 30, 2025. It reported a negative Net Worth as of March 31, 2024, and negative Ebitda in Fiscal 2024 and for the quarter ended June 30, 2025. An inability to achieve and sustain profitability could significantly harm the business and its operating results.

• Statutory Auditor Qualifications and Internal Control Weaknesses (Governance Risk)

The statutory auditors have raised several qualifications in their reports, indicating significant weaknesses in internal financial controls and governance. Key issues cited include: the company’s accounting software server not being located in India and the audit trail not being preserved as required; an unsecured investment of Rs 310.44 million deemed prejudicial to the company’s interest; the schedule of repayment for loans to two subsidiary companies was not stipulated; and a material uncertainty was noted related to subsidiary iNeuron’s ability to continue as a going concern.

• Dependence on Founders and Key Management (Business Risk)

The company’s success, brand identity, and strategy are heavily dependent on its founders, Alakh Pandey and Prateek Boob. The discontinuation of their services could adversely impact the business and student enrolments. This risk is compounded by high employee attrition rates, which were reported at 45.27% in Fiscal 2024 and 36.51% in Fiscal 2025.

• Evolving Regulatory Landscape (Industry/Regulatory Risk)

The coaching sector faces the risk of new and evolving government regulations. Guidelines from various state governments and the Ministry of Education (2024), which include restrictions on enrolling students below 16 years of age and new rules for advertising, could increase compliance costs and adversely affect the company’s business model.

• Risks Associated with Inorganic Growth Strategy (Business Risk)

The company has relied heavily on acquisitions as a key growth strategy. However, there is a significant risk that it may not be able to successfully integrate acquired companies. For example, the company acknowledged that with the iNeuron acquisition, it "did not realize the business synergies envisaged," which resulted in impairment charges and highlights the execution risk in its inorganic growth plans.

Outlook

PhysicsWallah’s IPO is priced at a price/revenue multiple of 7.5x on trailing twelve months basis, reflecting its rapid growth in subscriptions and user base. Despite historical losses and governance concerns, the company’s strong brand, community-driven model, and expansion strategy support subscription for listing gains.

The fresh issue proceeds will fund inorganic growth and technology enhancements, aligning with sector tailwinds like hybrid learning and digital penetration.

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