PhysicsWallah raises stake in Xylem Learning to over 77%

Edtech firm PhysicsWallah (PW) has raised its stake in Xylem Learning after the board approved the third amendment to the shareholders’ agreement, increasing its holding to 77.27% from 64.98%.

The listed education company said it acquired an additional 930 equity shares in Xylem Learning from existing shareholders, representing 12.29% of Xylem on a fully diluted basis, for a cash consideration of Rs 122.9 crore.

The move was approved at a board meeting on December 18 and follows earlier amendment agreements tied to a multi-tranche acquisition plan first disclosed in the company’s prospectus.

PW also revised the tranche-wise acquisition schedule and the valuation approach for the remaining tranches. Under the third amendment, the valuation mechanism will be based solely on EBITDA with 100% weight, and EBITDA multiples have been increased while revenue metrics have been removed from the formula.

Company filings noted that the change is intended to align commercial terms with strategic objectives.

Xylem is a fast-growing test-preparation business incorporated in December 2020. The documents show a paid-up share capital of Rs 7,56,700. PhysicsWallah has signalled an intent to complete full ownership by FY 2029-30.

Earlier this month, PW increased its stake in another subsidiary, Utkarsh Classes & Edutech Private Limited. The audit committee approved the third tranche of investment on December 8 under a previously agreed share acquisition terms agreement.

The company bought 25,599 equity shares of Rs 10 face value each, at a premium of Rs 10,342 per share, representing 12.25% of Utkarsh, for Rs 26.5 crore in cash. That lifted PW’s holding to 75.50% from 63.25%. It intends to acquire 100% of Utkarsh by March 2028.

In the same audit committee meeting, the group authorised further subscription-funded investments into its wholly owned units to shore up working capital and support growth.

The approvals include a subscription into PenPencil Edu Services Private Limited of up to Rs 399,85,48,400, into Finz Fintech Private Limited of up to Rs 20,00,00,000, and into Knowledge Planet Holding Limited of up to $2 million. 

The filings noted these are to be made by way of subscription and that the subsidiaries will remain wholly-owned.

The twin tracks of consolidation in learning assets and fresh funding for support businesses reflect a broader strategy to tighten control over higher-margin consumer education brands while building financial services capability within the group.

Last month, PW made its public market debut—one of the most anticipated of this year.

For FY25, PW reported operating revenue of Rs 2,886.6 crore, which is nearly 49% higher than the previous year. Operating cash flow stood at Rs 506.9 crore, and adjusted operating profit was Rs 432 crore with a margin close to 15%. The company recorded a net loss of Rs 243.7 crore. This was a significant improvement on the loss of Rs 1,131.1 crore in FY24, although wider than the loss in FY23.

Prior to the IPO proceedings, PW had raised a cumulative $312 million across several funding rounds. The most recent was a Series B round in September 2024, when it secured $210 million led by Hornbill Capital with participation from Lightspeed Venture Partners, GSV Ventures and WestBridge Capital.

Founded in 2016 as a YouTube-based learning channel, PW has expanded into a large education platform with online courses, classroom centres and hybrid programmes. Its primary audience comprises students in Tier II and Tier III cities preparing for engineering, medical and government entrance examinations.