PhysicsWallah Bets on China-Like Edtech Model: Will the Pivot towards K-12 Pay Off?

Edtech giant PhysicsWallah is planning to renew its focus on schools and the K–12 segment, shifting from its test preparation business, which currently accounts for about 97% of the company’s revenue.

During PW’s third-quarter (Q3) earnings conference call on Thursday, management representatives, Prateek Boob, Whole Time Director and Amit Sachdeva, Chief Financial Officer, highlighted that the K-12 market is nearly four times larger than the test preparation segment.

K-12 refers to primary and secondary education, spanning from Kindergarten till 12th grade, that generally covers children aged 5-18.

Boob noted that the test prep market has a total addressable market (TAM) of around 6 crore students and is growing at a compound annual growth rate (CAGR) of 13-15%. However, he emphasised that the K-12 segment offers a much larger opportunity, being four times the size of the test prep market.

As part of its growth strategy, PhysicsWallah plans to make focused investments in its K-12 platform. In its Q3 shareholder letter, the company said, “We will deploy capital to expand into K-12 education platforms, strengthening our curriculum, product offerings, and long-term franchise in this segment.”

China’s Edtech Market

Explaining the company’s decision to focus on the K-12 segment, Boob drew a comparison between India and China’s edtech market.

He said that among mature economies, China serves as a strong benchmark because of its similar demographics. Just as India has competitive exams such as JEE and NEET, China has the Gaokao.

Boob pointed out that while test preparation was a dominant market in China for many years, the K-12 segment has since grown larger and now leads both offline and online education markets.

Reflecting a similar long-term view for India, he said PhysicsWallah had already begun laying the groundwork for K-12 expansion, adding, “To address the K-12 market, we had also seeded a product around 18 to 24 months ago, which was an online playbook called Curious Junior.”

Solving the Root Cause

India’s K–12 segment, with over 1.5 million schools and around 260 million students, is nearly four times larger than the test-prep market. PW believes the country’s heavy reliance on coaching stems from weak schooling, where learning gaps are already entrenched by Class 11. This turns competitive exam preparation into a remedial exercise rather than an additive one.

“The entire coaching industry is the outcome of bad schooling in the country. We want to fix it at the root,” Boob said.

To address this, PW is shifting its focus upstream to foundational schooling, where learning habits and conceptual clarity are first formed. The company argues it has a structural advantage through its existing ecosystem spanning early learning, online and offline coaching, and multiple exam categories, making K–12 a natural extension.

PW is now making a deeper push into physical schools, allocating ₹400 crore to build its K–12 platform through Pen Pencil, its school management arm. While management expects limited near-term revenue impact, it believes K–12 will become a significant EBITDA contributor and eventually a larger business than test preparation over the next five years.

Sachdeva said, “We have allocated ₹400 crore so far for building the K-12 platform.” Management expects limited near-term revenue impact, “For now, the K-12 push is unlikely to move the needle on revenues,” Boob said, but believes K-12 will become a meaningful EBITDA contributor and eventually outgrow test preparation.

PW Q3 Performance

PhysicsWallah delivered a strong Q3 FY26 performance, reporting a 34% year-on-year rise in operating revenue to ₹1,082 crore from ₹810 crore in the same quarter last year, while profit crossed the ₹100 crore mark.

Including ₹65 crore from interest income and gains on financial assets, total revenue stood at ₹1,147 crore for the quarter. For the nine-month period, revenue grew 31% year-on-year to ₹2,981 crore.

On the cost side, total expenses increased 33% to ₹980 crore, driven primarily by employee benefits, which remained the largest cost component at ₹490 crore, accounting for about half of overall expenses. Depreciation and amortisation stood at ₹113 crore, while direct expenses rose 22% to ₹113 crore. Net profit grew 33% year-on-year to ₹102 crore in Q3 FY26 and was up 46% sequentially from ₹70 crore in Q2 FY26.

Following the results, PhysicsWallah’s shares closed at ₹122, valuing the company at ₹34,888 crore ($3.8 billion). The edtech firm had made a strong stock market debut earlier, listing at ₹145 per share, a 33% premium to its issue price, with its ₹3,480 crore IPO comprising a ₹3,100 crore fresh issue and a ₹380 crore offer for sale.