Is PhysicsWallah’s stellar public debut the turnaround edtech sector was waiting for?

PhysicsWallah Ltd’s stellar listing looks set to set the tone for the broader edtech sector over the next few quarters and bring funding back to online learning startups that have been capital-starved for two to three years, according to investors, founders and industry experts.

Westbridge Capital-backed company, ₹3,100 crore in its initial public offering, listing at a 33% premium over its IPO price. Shares of the education technology company closed at the following valuation: ₹44,000 crore (about $5 billion) on the first day of trading. The stock opened on: ₹145 on the National Stock Exchange and ₹143.90 compared to the issue price on BSE. ₹109 per share.

Siddharth Pai, co-founder of 3one4 Capital, sees PhysicsWallah’s launch as validation of the original edtech bet. He argues that the explosions at Byju’s and Unacademy were due to company-specific preferences, not a fatal flaw in the broader thesis.

“There were different reasons why each of them failed,” he said, pointing to management and over-expansion in the Byju case, and overvaluation during the covid period and “business depletion” when schools reopened in the Unacademy case. In contrast, PhysicsWallah showed that an edtech company could recruit students at a low cost, remain profitable without big checks coming in, and grow without relying on “unsustainable” marketing expenses.

The financial enthusiasm of the Covid period has diminished. From $4.15 billion across 378 deals in 2021, equity financing for edtech startups has fallen consistently to $141 million across 49 deals so far in 2025, according to Tracxn data.

Investors have also intensified their scrutiny of new-age companies tapping public markets. However, PhysicsWallah’s IPO was 1.92 times oversubscribed overall; qualified institutional buyers bid 2.86 times their quota, and retail investors bid 1.14 times. The non-institutional (HNI) bucket covered only about half, at 0.51 times.

While many investors debate whether new-age companies like PhysicsWallah should manage the valuation of a tech company or a traditional education services provider, given the offline pressure, PhysicsWallah, which is 72% founder-owned, has managed to manage the valuation of a tech company. ₹37,000 crore in the list.

In the 25th century, restated income of approx. ₹The IPO of ₹ 2,887 crore values ​​the company at more than 10 times its sales and a steep premium to its net asset value. PhysicsWallah reports net loss ₹243 crore in the same year and the adjusted EBITDA or operating margin was just under 15%.

Valuation at technology level

Pradyumna Nag, partner at transaction advisory firm Prequate Advisory, said PhysicsWallah is actually valued at about 10 times its revenue, which is a pure technology multiple, but the business is now a “fragmented hybrid” where half of the growth is expected from offline hubs. “Historically, offline education players in India have struggled to generate more than three to five times revenue, so investors naturally need to be cautious at these levels.”

According to PhysicsWallah’s DRHP, FY25 revenue was split almost evenly between online and offline publications; about 48-49% came from digital courses and about 47% from physical centers; here is the average revenue per user ₹40,000 for offline centers compared to six ₹4,000 online.

3one4 Capital’s Pai describes PhysicsWallah’s valuation as “affordable”, given the brand story and the lack of genuine peers in India’s listed markets. He believes the stock can trade well as long as two things hold true: The company doesn’t face a close competitor in the same category, and it offers realistic guidance and then runs into it.

“What will hurt them in the long run is if they actually give enthusiastic guidance and then continually miss it,” Pai warned. “The market will then assume the company has no visibility into their business and roll them over.”

Implausibility test

Irrational enthusiasm has once again devastated India’s edtech sector.

India’s edtech story during the covid boom between 2020 and 2022 was defined by massive controls and ever-increasing valuations. Byju alone has raised over $3 billion across multiple rounds in that period; this includes a $1.46 billion fund in 2021 and an $800 million fund in March 2022 that took its valuation to $22 billion. At that time, global investors such as General Atlantic, Tiger Global, Chan Zuckerberg Initiative, Qatar Investment Authority were flocking to the capital table.

Unacademy raised a $440 million round led by Temasek in August 2021, with support from investors including SoftBank, General Atlantic and Tiger Global, as demand for online courses increased during the pandemic, rising from $2 billion at the end of 2020 to $3.44 billion.

Three years later that foam has completely evaporated. Byju’s, once India’s most valuable startup, is currently battling creditors in bankruptcy proceedings and the courts, while Unacademy is in talks to sell its core test prep business for just $300-400 million to rival UpGrad, a fraction of its $3.44 billion peak valuation, effectively erasing the value of many late-stage backers.

The slowdown affected both ends of the funding spectrum: Seed-to-Series A inflows fell from $597 million across 338 deals in 2021 to just $38 million across 39 deals in 2025, while Series B and beyond fell from $3.5 billion across 40 deals in 2021 to $103 million across 10 deals in 2025.

Early-stage deals still account for a large portion of deal activity in terms of numbers, even though their dollar value has decreased. Much of this new capital was invested in education and skills development abroad. Eruditus, the executive training company founded by Ashwin Damera, recently completed a refinancing deal of up to $150 million led by Mars Growth Capital (a joint venture between Liquidity Group and Japan’s MUFG Bank) and with additional participation from HSBC.

PhysicsWallah a reference point

However, growth-stage funds already see PhysicsWallah’s IPO as a benchmark for what public markets are willing to pay for education businesses that blend online scale with offline hubs and still report losses, according to founders and investors.

A founder of an edtech startup focused on skills development, speaking on condition of anonymity, said multiple offers to venture capital and private equity funds in recent months have been met with the same feedback; PhysicsWallah’s public market launch is now a living leaderboard that will influence how both public and private capital approach education technology over the next 12-24 months.

Private market investors now expect the core education business to be fully cash-generating and any cash burn to be limited to new bets rather than the core engine, said Mukul Rustagi, CEO and co-founder of Classplus, which offers test preparation as well as SaaS software for teachers and schools. “But in the public markets, it’s clear that how PhysicsWallah trades over the next four to eight quarters will determine whether 10 times sales is sustainable or whether the market will push it to a lower band.”

Rustagi said there is no greater universal valuation benchmark for a sector like edtech than public market pricing… “PhysicsWallah’s IPO is a very clear benchmark. Private investors will recalibrate how they define, evaluate and value their edtech investments based on how this stock trades.”

He said public markets set valuation criteria, signal which growth rates are rewarded and indicate which business models and strategies are truly appreciated. “Over the next one to two years, these stock trades will determine how education companies are valued, how bullish private markets will be in this segment, and how liberal investors will be willing to be in their valuation multiples.”