ETMarkets Management Talk: Physics Wallah records 3x jump in FY23 revenue, FY24 target of Rs 2,500 crore: Prateek Maheshwari

NEW DELHI: Profitable edtech unicorn Physics Wallah’s FY23 revenue has jumped three-fold to Rs 780 crore as compared to Rs 233 crore in FY22. “For the ongoing financial year FY24, our company has set an ambitious revenue target of Rs 2,500 crore at the group level, with approximately Rs 1,900 crore coming from our core operations and the remainder from acquired businesses,” says Prateek Maheshwari, Co-Founder, Physics Wallah.The startup is also targeting a 20% EBITDA margin for FY24 to retain emphasis on profitability. Edited excerpts from a chat with Maheshwari:

How did FY23 turn out for the business? Were you able to match the pace of growth seen in the last 2-3 years?
We experienced a remarkable three-fold increase in revenue, generating approximately Rs 780 crore ($95 million) in FY23 compared to Rs 233 crore in the previous year. We anticipate that the company will register a sizable profit for the year, indicating that our revenue growth is likely to translate into a significant increase in profits. We will continue to maintain the momentum of our growth in the future.What is the business outlook for FY24?
Physics Wallah is optimistic about the business outlook for FY24. We are adding more exam categories and focusing on skilling, which we believe will help us expand our offerings and reach a wider student base. Additionally, we are exploring a business model around schools, which we hope will provide further growth opportunities. For the ongoing financial year (FY2023-24), our company has set an ambitious revenue target of Rs 2,500 crore ($300 million) at the group level, with approximately Rs 1,900 crore coming from our core operations and the remainder from acquired businesses. We are also targeting a 20% EBITDA margin for FY2023-24, indicating our continued emphasis on profitability. Achieving this target would be a significant milestone for us and would further solidify our position as a profitable ed-tech startup, which is rare in our industry. Based on our recent performance and targets, we are confident that we are well-positioned for continued growth and profitability in FY2024 and beyond.

In which part of the business do you see much of the growth coming in during FY24?
The growth in the next financial year will come from multiple directions, including the emergence of new online categories such as UPSC and PW skills and others, as well as the established and successful categories of NEET and JEE. Additionally, we anticipate robust growth in our offline VP centers, which will continue to be a vital part of our business. Overall, we are optimistic about the opportunities for growth in the coming year and are committed to staying at the forefront of the education industry.Given the profitability you have, how do you plan to utilize the surplus cash in expanding in new verticals?
As a profitable ed-tech startup, we have several plans for utilizing our surplus cash in expanding into new verticals. Firstly, we are focused on building a talented and diverse team to drive our growth forward. In the first quarter of 2023, we announced our aim to hire 2500 more employees across verticals. We also plan to expand our offline Vidyapeeth centers across the country, invest in tech innovation, and build new verticals such as PW SKILLS, PWOnlyIAS, and school-integrated programme.

The SIP program is designed to integrate the concepts and skills required for CBSE exams, along with JEE and NEET preparation, into regular classroom instruction, minimizing the need for separate coaching classes for students in tier II and III towns, where quality coaching is not available. We are also looking to acquire ed-tech companies operating in southern India to increase our brand’s reach in the market.

Additionally, we would explore building permanent partnerships with companies that match our ethos, especially those in small towns and cities, to reach students in rural and remote areas that might not have access to traditional educational resources. Moreover, we are looking to acquire players with good K-12 content capabilities and counseling services to help students in college placements, among other areas. Our aim is to expand into new verticals and provide a comprehensive education solution to students across India.

Any plans to expand beyond India to newer geographical markets?
As an education company, our mission is to provide quality education to students across India. While we are primarily focused on the Indian market, we recognize the importance of expanding our reach beyond India to newer geographical markets. Recently, we partnered with Knowledge Planet, which will help leverage our combined strengths and capabilities across online and classroom coaching for NEET/JEE to deliver quality education, at scale across the Middle East region.

We will further expand to the GCC region. We are always looking for opportunities to grow and reach every student, and therefore, Physics Wallah is continuously exploring relevant and best opportunities to expand into other international markets.

How important a role does disruptive pricing play in increasing the market share?
Disruptive pricing can play a significant role in increasing market share, particularly in a competitive industry like ed-tech. At Physics Wallah, our aim has always been to prioritize the needs of our students and offer them affordable, high-quality education. By pricing our services at half the market rate, we have been able to differentiate ourselves and build a strong, loyal student base. Our focus on providing value to our students has been a key factor in our success, enabling us to stand out in a crowded marketplace and capture a larger share of the market. Ultimately, disruptive pricing can be a powerful tool for companies looking to gain a competitive edge, as it allows them to offer their services to a wider audience while maintaining profitability.
In terms of your revenue, what is the online-offline mix that you are expecting in the next few years?
As of FY2023, our revenue mix was about 65% online and 35% offline. Looking ahead, we expect this ratio to shift slightly to 60:40 in the coming year. Currently, we have 60 company-owned offline Vidyapeeth centers, and we plan to double this number in the next academic year. This expansion will allow us to serve more students through offline channels and increase our revenue from offline sources. Furthermore, we are exploring opportunities to partner with government schools in Tier-2 and Tier-3 locations to address the education gap in these areas. By leveraging our expertise in ed-tech and our experience in providing high-quality education, we believe we can make a meaningful impact on the lives of students in underserved communities. Overall, our goal is to achieve a balanced revenue mix that combines the benefits of online and offline channels while maximizing our reach and impact.

Any plans to raise funds from the public market in the near future?
No, we are not looking to raise any funds.

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