PhysicsWallah IPO: 'Major Investments Are Done, Now It’s Time for Public to Join Our Journey', Says Alakh Pandey

We have decided about getting listed during our two major investments: first, new categories in online classes and second, offline expansion during FY23 and FY24. We opened centres rapidly and launched new exam categories such as UPSC, ICA, Commerce, and MBA after starting with JEE and NEET. Our major investment was in creating these exam categories. When we launch a new category, students don’t join immediately. We first teach for free on YouTube to build community and distribution. After this, we launch a proper online batch, which may have 5,000 or 10,000 students.

Initially, the cost of teachers, smart boards, infrastructure is fixed. As more students join, it moves toward profitability. Every exam has its own critical number: for some, 4,000 students; for others, 1,000 or 9,000. We launched 34 exams in two years, so major investments went there.

Many of these exams have now become profitable, while some are at breakeven. Even offline, we opened 170 centres in two years. Our expansion run rate is now slower than before, which is about 70 centres going forward. So, we feel that the major investment phase is largely over.

If you look at EBITDA, it has improved dramatically in the last two years. Our control on the bottom line has strengthened. Cash flow from operations also grew i.e., ₹200 crore in FY24 and ₹500 crore in FY25. All these indicators showed sustainable growth. Major investments are done, the offline model and unit economics are figured out.

And this was the time when we decided to go for an IPO. The bottom line is clear and improving. We felt that public investors can now become our partners in this growth journey. Also, I felt that it’s good to be in the public eye because past examples in the edtech sector haven’t been great. Going through the IPO process, the company itself improved significantly. We brought in independent directors, built new processes, and became more disciplined.

I hold a large equity stake, so I’m committed to running it for life. More than equity, it’s my personal brand and identity. So, listing is also an emotional decision. By listing during our growth phase, everyone can benefit and be part of our journey.

Honestly, most changes have already happened before listing like major investment decisions, new launches, board members, etc. Our board is already independent, with marquee members across finance, HR, and other domains. So, there won’t be major governance changes after listing.

Our revenue and collection cycles depend on the academic year. Most fees are collected in April–July, while revenue is recognised over 10 months as courses run. So, the first quarter of any financial year looks negative due to high collection but deferred revenue. But the third quarter looks very strong.

Comparing quarter-on-quarter won’t show the real picture, but year-on-year comparisons make sense. Though thankfully, our financial year aligns with the academic year. As our category mix expands like now only 50% is JEE/NEET versus 100% in 2020, the revenue pattern is becoming more balanced.

About 80% of doubts are now handled through AI, but subject matter experts still exist. Earlier, we needed 20 experts per class but now, we need only four. The remaining doubts are solved manually, which become a part of our library to train the AI. And it is important to mention that achieving 100% accuracy is impossible. Even human average accuracy rate stands at around 91%. So, we keep improving with time and feedback. The more students use our AI Guru, the more data we get to refine it.

The AI biasedness is also minimal in our system because mostly data is factual as answers in science or math aren’t opinion-based. But we have added flags to handle emotional or sensitive topics. For instance, if a student expresses distress, the query is redirected to counsellors. We personally fund and run this counselling initiative to address student stress.

Currently, it’s almost equal which is about 48–47% each. I can’t comment on future numbers as of now. The offline segment requires higher paying capacity, while online has deeper penetration. We have opened 170 centres in two years, with a run rate of around 85 annually. Going forward, it will be around 70.

The losses are due to heavy investments in offline expansion and new online categories. Cash from operations was ₹212 crore in FY24 and ₹506 crore in FY25. Till date, we have raised $210 million, and we still have $300 million in treasury, and that speaks for itself. Despite acquisitions and project spends, our cash balance remains strong.

Some reported losses include accounting adjustments like CCPS (compulsory convertible preference shares). Overall, the company has improved by 90% in two years and is already cash rich.

I don’t need everyone. I need around 500 teachers across the company. For online, the number is even smaller. We created a faculty training programme to solve this challenge. We invite applications through YouTube and social media, and around 30,000 to 40,000 apply across India. They undergo testing and demos at our centres. Selected candidates are trained for six months with stipends.

After training, we assign them to doubt-solving, content preparation, or offline teaching. We benefit from social media scale. Out of 40,000 applications, we can filter about 400 strong candidates. Teacher performance is tracked via ratings, engagement, attendance, and homework or test accuracy. Based on that, we retain or replace teachers. We are very strict about teacher rating, there is no compromise.

Yes, I faced that bias around 2020 when I stopped teaching paid batches. It took around four months to build the right team and quality. It was a conscious decision. I couldn’t focus on scale, tech, and quality if I kept teaching. I have not taught paid batches for the last five years now, though I sometimes teach free on YouTube. I keep paid teaching separate to avoid bias and ensure transparency with investors.

We don’t have any international expansion plan. But in India, our focus is on Southern region such as Andhra Pradesh, Telangana, Karnataka, Tamil Nadu, and Kerala. In the first year, we captured 6% in Andhra Pradesh and 15% in Telangana. Our penetration is still low in Odisha and Gujarat, which is below 15%.

Our stronger markets are UP, Bihar, MP, Maharashtra, and Rajasthan with 25–30% penetration in JEE/NEET, but less than 20% in other exams. We plan to grow in the South, Northeast, Gujarat, and Odisha. There’s no plan for expansion outside India.

In acquisition part, we have already done a few partnerships, such as with Dr Shivin Chaudhary, a UPSC top ranker, for our IAS coaching platform. We also partnered with Dr Varun Goel, a MAMC (Maulana Azad Medical College) alumnus who was already doing well online. It is a profitable and pure online business.