PhysicsWallah Limited (NSE: PWL) reported a 34% year-over-year increase in quarterly revenue, reaching ₹10,824 million, driven by a 20% rise in online enrollments and a 36% increase in offline student numbers. Management confirmed that total revenue for the first nine months of FY26 has already exceeded the full-year performance of FY25.
The company reported revenue from operations of ₹10,824 million for the quarter ended December 31, 2025 and achieved a Profit After Tax (PAT) of ₹1,023 million, maintaining a PAT margin of 9.4%. Adjusted EBITDA for the quarter stood at ₹3,512 million, representing a 32.4% margin and a 40% increase compared to the same period in the previous year. Pre-IndAS EBITDA grew 42% year-over-year to ₹2,188 million, with margins expanding to 20.2%.
Results for the third quarter were impacted by one-time expenses totaling ₹236 million. These costs included ₹153 million related to the implementation of the New Labor Code in November 2025 and ₹83 million in offer expenses from the company’s recent initial public offering.
Year-over-Year and Nine-Month Context
Revenue for the first nine months (9M) of FY26 reached ₹29,807 million, a 31% increase over the ₹22,770 million recorded in 9M FY25. The 9M PAT closed at ₹450 million after accounting for one-time expenses. The online channel contributed ₹15,350 million to 9M revenue, reflecting 38% year-over-year growth. Offline channel revenue increased 26% to ₹13,674 million during the same period. Unique transacting users in the online channel grew from 3.30 million to 3.96 million year-over-year. Offline student enrollments reached 0.41 million, supported by an expansion of the center network to 318 locations.
SWOT Analysis
Strengths:
- Omnichannel Scale: High engagement with over 3.4 million daily active users and an average engagement time of 106 minutes.
- Capital Position: Total treasury of ₹50,544 million as of December 31, 2025, providing significant liquidity for expansion.
- Operational Efficiency: Net cash inflow from operating activities for 9M FY26 was ₹6,429 million, exceeding the ₹5,069 million recorded for the full FY25.
- Proprietary Technology: Development of the “Aryabhata” custom large language model and a suite of AI tools including AI Guru and AI Grader.
Weaknesses:
- Decreasing Offline ARPU: Average Revenue Per User in the offline channel fell to ₹31,880 in 9M FY26 from ₹35,073 in 9M FY25 due to a shift in business mix and short-term courses.
- Concentrated Revenue Mix: While diversifying, the IIT-JEE and NEET categories still represent 30% of total enrollments.
Opportunities:
- K-12 Market Entry: Strategic expansion into the school segment through a ₹4,000 million capital infusion into the Pen Pencil subsidiary and the acquisition of Tender Hearts School assets.
- Vernacular Expansion: Early traction in non-Hindi markets with 90,000 paid enrollments across Marathi, Bangla, Gujarati, Kannada, and Odia.
- Market Penetration: Current online penetration is estimated at approximately 2% of the total Indian online education market.
Threats:
- Regulatory Changes: Financial impacts from the New Labor Code regarding wage definitions and leave benefits.
- Competitive Landscape: Entry of large technology firms, such as Google, into specific segments like JEE-focused mock testing.
EdTech Deployment:
The company’s proprietary large language model, Aryabhata, is positioned to improve academic outcomes for Indian students preparing for competitive exams such as the JEE through personalized, AI-led learning tools.
The platform delivers hyper-personalized practice using proprietary learning signals and exam-specific pedagogy to identify weak areas and improve study efficiency. Automated evaluation tools, including the AI Grader, have assessed more than 1 million subjective answer scripts with a reported 4.3/5 satisfaction rating, supporting structured feedback in descriptive exam formats.
AI-led doubt resolution remains a core deployment area. The AI Guru assistant resolves about 4.5 million student queries monthly. A voice-first Ask AI pilot reported 92% satisfaction across roughly 1.9 million queries, indicating faster clarification cycles and improved accessibility.
The system also functions as a teacher co-pilot, automating content creation and evaluation workflows to improve instructional productivity and operating leverage. An AI Mentor module provides academic stress and well-being support, with more than 400,000 students supported to date.
The company is expanding AI features across its product ecosystem. The State Boards category launched in June 2025 has scaled to more than 175,000 paid learners in its first year. The AI-driven English-speaking app, PW Talks, has surpassed 1.2 million installs and operates on a freemium model.
Capital Deployment
Investors are monitoring the deployment of the ₹50,544 million treasury toward disciplined offline expansion, specifically in Southern India, and selective inorganic opportunities. The company intends to shift from being a test-preparation platform to a comprehensive education ecosystem by integrating K-12 platforms. Future growth strategies include scaling mass-market State Board offerings and enhancing AI capabilities for hyper-personalized practice systems.
Execution Risk
Financial reporting indicates that while revenue is growing, margins are subject to fluctuations from one-time regulatory and IPO-related costs. The company also faces potential execution risks as it expands into asset-backed partnerships in the K-12 sector and navigates the competitive pressure of global technology players entering the Indian test-prep market.
Earnings Summary
- Revenue Growth: Quarterly revenue rose 34% YoY to ₹10,824 million. Nine-month revenue reached ₹29,807 million, surpassing the full previous fiscal year.
- Margin Stability: Adjusted EBITDA margin stood at 32.4% for the quarter.
- PAT remained positive at ₹1,023 million despite ₹236 million in one-time regulatory and IPO expenses.