Physicswallah Limited Q3 FY26 Earnings Call Summary

Summary

Physicswallah Limited - Q3 FY 2026 Earnings Call Summary Friday, February 06, 2026 04:00 P.M. IST

Event Participants

Executives 2 Amit Sachdeva (CFO), Prateek Boob (Whole-Time Director)

Analysts 6 Ayushi (Arth Vritt Capital), Diwakar Shukla (Amaya Capital), Gaurav Malhotra (Axis), Manish Adukia (Goldman Sachs), Pratyush Kamal (Incred Equities), Ritesh Iyer (Ritz Capital), Shubham (Nirmal Bang Equities), Swapnil Potdukhe (JM Financial), Yashika Pancholi (Centrum)

Financials & KPIs

Geographic & Segment Commentary

• Online Segment: Contributes 51% of total revenue and grew 38% YoY. Focus remains on community-led “Zero CAC” models via 250 YouTube channels and 3.4 million daily active users (DAU) on the mobile app.
• Offline Segment (Vidyapeeth): Contributes 46% of revenue, growing 26% YoY. Operates over 300 tech-enabled centers catering to 7% of the total learner base who require physical intervention for better outcomes.
• Vernacular & State Boards: Rapidly expanding into 5 regional languages with 94,000 paid students (₹24 crores revenue). Management views state boards (6 crore student TAM) as the next mass-scale growth driver similar to JEE/NEET.

Company-Specific & Strategic Commentary

• K-12 Foray: Allocated ₹400 crores to a school management subsidiary to operate greenfield and brownfield schools. Strategy focuses on “test-prep integrated” schooling to capture students in formative years (Grades 3-12).
• AI Innovation: Launched “Aryabhata” (small language model) and “PW Talks” (AI-led English learning). AI pod costs rose 40%, but proprietary RAG layers provide higher accuracy than generic models at 1/10th the cost.
• Inorganic Growth: Successfully integrated “Sarrthi” (UPSC), which doubled revenue to ₹22 crores in Q3. Management targets 8-12x multiples for future profitable domestic acquisitions.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

K-12 Strategic Rationale

• Question: Why enter K-12 schools when test-prep has significant headroom? (Manish Adukia)
• Answer: The K-12 market is 4x larger than test-prep. By integrating test-prep into schools, we address “bad schooling” which is the root cause of coaching needs, while securing long-term LTV through a 1st-to-12th grade lifecycle (Prateek Boob).

Marketing Leverage

• Question: Will marketing spends be lower in Q4? (Swapnil Potdukhe)
• Answer: We front-loaded spends in Q1/Q2. Full-year spend will be 8-8.5% of revenue, down from 9.6% last year. Q3 saw a ₹20 crore absolute drop in marketing spend YoY (Amit Sachdeva).

AI Differentiation

• Question: How can PW compete with Gemini or OpenAI? (Ritesh Iyer)
• Answer: Our models (Aryabhata) use proprietary student data and “RAG” layers for higher accuracy in niche test-prep. Our SLMs operate at 1/10th the cost of global LLMs (Prateek Boob).

M&A Strategy

• Question: What is the roadmap for M&A and international expansion? (Diwakar Shukla)
• Answer: No international expansion planned; focus remains domestic. We target profitable entities with 25-50% initial stake and 3-4 year earnouts for founders (Prateek Boob).

Key Takeaway

Physicswallah delivered a strong Q3 FY26 with revenue reaching ₹1,082 crores (+34% YoY) and a healthy Pre-Ind AS EBITDA margin of 20.2%. The company has successfully diversified beyond its core JEE/NEET origins, with UPSC and state board verticals showing hyper-growth. Strategically, the firm is pivoting toward an integrated K-12 model, allocating ₹400 crores to manage schools and launching AI-driven products like PW Talks to capture a larger share of the student lifecycle. While core test-prep enrolments in North India are maturing, management is leveraging a massive ₹5,000 crore cash reserve to fuel offline expansion and inorganic growth. The company remains on track for 32-35% revenue growth for the full year, underpinned by its “Zero CAC” community-led distribution model.