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

PhysicsWallah Ltd’s stellar listing is likely to set the tone for the wider edtech sector over the next few quarters, bringing back funding to online learning startups starved of capital for two to three years, according to investors, founders and industry experts.

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

Siddharth Pai, founding partner at 3one4 Capital, sees PhysicsWallah’s market debut as a validation of the original edtech bet. He argues that the blow‑ups at Byju’s and Unacademy were driven by company‑specific choices, not by some fatal flaw in the broader thesis.

“Each of them had different reasons why they tanked," he said, pointing to governance and over‑extension in Byju’s case and a mix of covid‑era overvaluation and “running out of steam in the business" once schools reopened in Unacademy’s case. By contrast, PhysicsWallah showed that an edtech company could acquire students at low cost, stay profitable before large cheques came in, and grow without relying on “unsustainable" marketing spends, he said.

The Covid-era funding euphoria has faded. From $4.15 billion across 378 deals in 2021, equity funding for edtech startups has dropped consistently to $141 million across 49 deals so far in 2025, according to Tracxn data.

Investors have also intensified the scrutiny of new-age companies as they tap public markets. Yet, PhysicsWallah’s IPO was subscribed 1.92 times overall, with qualified institutional buyers bidding 2.86 times their quota and retail investors 1.14 times. The non-institutional (HNI) bucket was covered only about half at 0.51 times.

While most investors debate whether new-age companies like PhysicsWallah should command valuations of a tech company or that of a traditional education services provider, given the offline push, PhysicsWallah, which is 72% owned by the founders, has managed to command a valuation of ₹37,000 crore on listing.

On FY25 restated revenue of around ₹2,887 crore, the IPO values the company at more than 10 times its sales, and at a steep premium to its net asset value. PhysicsWallah reported a net loss of ₹243 crore and an adjusted Ebitda or operating margin of just under 15% in the same year.

Tech-level valuation

PhysicsWallah’s is effectively being valued at around 10 times revenue, which is a pure tech multiple, but the business is now a “fractured hybrid" where half the growth is expected from offline centres, said Pradyumna Nag, partner at transaction advisory firm Prequate Advisory. “Historically, offline education players in India have struggled to sustain more than three to five times revenue, so there is natural investor caution at these levels."

According to PhysicsWallah’s DRHP, FY25 revenue was almost evenly split between online and offline streams, with around 48–49% coming from digital courses and about 47% from its physical centres, where average revenue per user is upwards of ₹40,000 for offline centres, compared with under ₹4,000 online.

Pai of 3one4 Capital describes PhysicsWallah’s valuation as “fairly priced", given the brand story and the lack of true comparables in India’s listed markets. He believes the stock can trade well as long as two things hold: the company doesn’t face a close listed rival in the same category, and it offers realistic guidance and then meets it.

“The thing that will hurt them over in the long run is if they end up actually giving exuberant guidance and miss it consistently," Pai warned. “The market will then assume that the company don’t have visibility on their own business and will roll them."

Test of irrationality

Irrational exuberance has already singed India’s edtech sector once.

During the covid boom between 2020 and 2022, India’s edtech story was defined by mega cheques and ever-rising valuations. Byju’s alone raised well over $3 billion across multiple rounds in that period—including a $1.46 billion funding in 2021 and an $800 million round in March 2022 that took its valuation to $22 billion. Global investors such as General Atlantic, Tiger Global, Chan Zuckerberg Initiative, Qatar Investment Authority, crowded onto the cap table at the time.

Unacademy raised a $440 million round led by Temasek in August 2021 at a valuation of $3.44 billion, up from $2 billion in late 2020, backed by investors such as SoftBank, General Atlantic, and Tiger Global, as pandemic-era demand for online classes surged.

Three years on, that froth has all but evaporated. Byju’s, once India’s most valuable startup, is now in insolvency proceedings and fighting creditors in tribunals, while Unacademy is in talks to sell its core test prep business to rival UpGrad for just $300–400 million, a fraction of its $3.44 billion peak valuation, effectively wiping out value for many late-stage backers.

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

While early-stage deals still account for the bulk of deal activity by number, even as their dollar value has shrunk. Much of this fresh capital has been invested in study-abroad and skill-development businesses. Executive education firm Eruditus, founded by Ashwin Damera, recently closed a refinancing deal of up to $150 million, led by Mars Growth Capital( a joint venture between Liquidity Group and Japan’s MUFG Bank) with additional participation from HSBC.

PhysicsWallah a benchmark

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

A founder building an upskilling-focused edtech startup, who spoke on the condition of anonymity, said multiple pitches to venture capital and private equity funds in recent months have been met with the same feedback—that PhysicsWallah’s public market debut is now a live scoreboard that will influence how both public and private capital approach edtech over the next 12–24 months.

Mukul Rustagi, chief executive and co-founder of Classplus, which offers SaaS software for tutors and schools along with a test prep offering, said private market investors now expect the core education business to be properly cash generative, with any cash burn confined to new bets rather than the main engine. “But within public markets, it's clear that how PhysicsWallah trades over the next four to eight quarters will decide whether 10 times sales is sustainable or whether the market pushes it down to a lower band."

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

Public markets set valuation benchmarks, signalling what growth rates are rewarded, and they indicate which business models and strategies are really appreciated, he said. “Over the next one to two years, how this stock trades will decide how education companies are valued, how bullish private markets become on the segment, and how liberal investors are willing to be on valuation multiples."