We are a hyper-growth company, had no pressure to price up IPO, says PhysicsWallah co-founder Prateek Maheshwari

PhysicsWallah co-founder Prateek Maheshwari

Investors value companies for where the train is heading, not where it’s been, PhysicsWallah co-founder Prateek Maheshwari has told Moneycontrol, as India’s youngest edtech unicorn prepares for one of the most closely watched listings of the year.

The five-year-old education technology platform has set a price band of Rs 103–109 a share for its initial public offering (IPO), targeting a valuation of about Rs 31,500 crore at the upper end, a bold move in a sector still regaining investor confidence.  The Rs 3,480-crore issue opens for subscription on November 11. With most edtech peers struggling to find stable footing, the IPO is being seen as a litmus test for the sector’s credibility.

In the interview, Maheshwari talks about the company’s valuation logic, investor expectations and why PhysicsWallah's listing “isn’t an exit, but an entry into the next phase of growth”. Edited excerpts:

Yours is India's first major edtech IPO and you're also one of the youngest startups to go public. What was going through your mind when you started the listing process?

So, this entire process started with Alakh (Pandey) telling me that we should list. I asked if it was too early but our thesis was that we have built something beautiful – a well oiled machine. If we list, we will improve the governance, controls and the branding of the company. Our overall reach will improve.

Our revenue has grown nearly four-fold in two years. We wanted to list while we’re still young and scaling fast, so incoming investors could also benefit. Traditionally, companies unlock most of their growth in private markets, which slows after they go public. That was part of our thought process.

There is a lot of weight PhysicsWallah’s IPO is carrying for the whole edtech sector. How are you feeling?

I’m honestly a bit tired (laughs). I just want to go back to Noida and focus on the core business and our next growth areas. The IPO is just a milestone... just attaches few numbers like share price and valuation but what truly matters are our students’ outcomes. They won’t get this time back; their JEE, NEET, or UPSC journeys are far more important than our listing day.

Yes, the IPO is significant for our brand message and vision, but post-listing, our priority is to reach every child in India who needs affordable learning. The bigger issue is the shortage of good teachers .. .that’s the problem we want to solve, whether it’s us or anyone else.

What does this milestone say about the Indian edtech sector?

Indian edtech can be seen via two lenses — the media lens, shaped by a few players’ struggles, or the student lens, tells a very different story. Most edtechs operated at premium price points accessible to barely 5 percent of India, but our model focused on affordability and access. That’s what helped us cross Rs 3,000 crore in topline and reach IPO stage within five years — a milestone that usually takes over a decade.

We’ve raised $210 million in primary capital and still hold a $300 million treasury, showing this business wasn’t built on private equity burn. Our philosophy is simple — build communities by teaching for free and monetise them responsibly. On average, our course are available for Rs 4,000 annually. That makes us a very uniquely positioned company.

Why did you decide to list now? Was it a strategic decision or something that evolved naturally as the company matured?

Eighty percent of the company is owned by Alakh and me, so it was primarily our decision. Unlike most internet firms, none of our investors are selling in the IPO — they’ve seen our growth and believe in the next phase. With strong revenue, a large student base, and solid growth prospects, we felt it was the right time to list while we’re still young and scaling fast.

You’ve priced the IPO at Rs 103–109, valuing the company at Rs 31,500 crore, over a 10x revenue multiple,  which is on the higher side considering global benchmarks. How did you arrive at this valuation and will it attract investors?

That’s a fair question. If you look at our journey, it’s not just about price-to-earnings but price-to-earnings-to-growth. We’re a hyper-growth company, the first in India to reach Rs 3,000-crore in topline within five years. We also operate in a massive total addressable market of 30 crore students, of which we’ve monetised only about 1.5 percent.

Valuation is ultimately set by market forces and we believe we’ve left enough value on the table. Investors look at where the train is headed, not where it’s been... this is a forward-multiple story. Since none of our investors are selling, there was no pressure to tweak pricing. What matters most is that the same lower-middle-class families we teach will buy our stock...their gains and our long-term performance will define PW’s true worth.

Why are institutional investors not selling? What is the message you are giving to the market?

Our four institutional partners together own about 16 percent. None of them wanted to sell because they’ve seen consistent growth and remain bullish on the future. Since they weren’t selling, we had to step in ourselves. Nearly 90 percent of the IPO is a fresh issue; the OFS is just 10 percent. We’re selling barely 1 percent of our equity and still holding about 80 percent, which shows how invested we remain long term.

There’s always a perception challenge when founders sell during an IPO. How do you address that optics question – ensuring retail investors see this as a long-term commitment not a partial profit-taking?

Nearly 90 percent of the IPO is a fresh issue — money that goes directly into the company. The offer-for-sale is just 10 percent. Since none of our investors wanted to sell, we had to step in ourselves. Given the treasury we were already sitting on, even SEBI questioned why we were raising so much primary capital. We’re selling barely 1 percent of our equity and still hold around 80 percent. Post-listing, we’ll dilute further to meet the 75 percent promoter cap. We’re comfortable with the criticism... it only shows how invested we remain in the long term.

Given early backers are not selling, is there any pressure to scale fast? How do you manage their expectations?

We have a majority stake in the company, which factors in to the decision making. Our investors have never had a majority vote. We hold them in high regard, and have learnt a lot from them. At the same time, our revenues have quadrupled. So there is no question of pressure. Our mission is to make learning more affordable...growth is a by product of that. This is a word-of-mouth business.

We’re obsessed with enrolment growth, we want to teach as many children as possible. We’ll keep the same focus post-listing.

Your revenues have quadrupled over the past two years. What were your top three growth levers?

We’ve launched 38 online exam categories in two years, now consolidated into 13 key verticals. We’ve become market leaders in UPSC, NEET, CA Inter, and CAT, both by students and revenue. Entering offline was another major lever — starting with JEE and NEET, now moving into UPSC. So we are now a full-fledged learning company. We’re also expanding into state boards and Indic languages... 11 launched in the last 18 months.

You have trimmed your losses and improved margins in FY25 but are still not profitable. How do you think that will shape investor perception?

We’re building for the long term and you’ll see PAT-level profitability very soon. Cash from operations improved over 100 percent 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.

During your roadshow, did any developments in the broader edtech space, particularly Byju’s, affect investor sentiment?

Surprisingly, no. Our average revenue per user (ARPU) is very different. Byju’s charged Rs 60,000-80,000 a year... other designed their courses for the top 5 percent. We designed our courses for the remaining 95 percent as well. However, there is still a lot of media overhang to focus on the couple of failures in the sector. But public investors understand the difference.

What is your current ARPU?

It’s Rs 3,600 for online learners as of FY25, and Rs 40,000 for offline learners. Both have improved steadily, but what’s grown faster is enrolment...both online and offline.

Offline learning is now driving almost half of your revenues, raising fixed costs. This could drag on your margins. Do you think you have enough pricing power to sustain profitability?

On a category level, we were profitable last year, and it will contribute over the next year. It’s unfair to compare offline margins to online...our steady-state offline margins are in the 15–18 percent  range, comparable to peers.

As you step into public markets, what will success look like for you one year down the line, beyond share price?

Success for us means teaching the maximum number of students possible. We want to see more children clearing NEET or IIT after studying with us. If a child from a slum, a painter from Kashmir, or a momo seller from Gurugram makes it to a top college, that will mean more than any financial milestone.