PhysicsWallah files draft red herring prospectus via confidential route

Physics Wallah has filed Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (Sebi), a precursor to hitting the primary market from where the edtech Unicorn reportedly plans to raise around ₹4,500 crore through IPO.

 

The Noida-based firm has taken the confidential pre-filing route, which means the financial details will not be made public immediately.

 

The company, known for its affordable and accessible online education, revealed the development in a public announcement on Wednesday.

 

While the filing of the DRHP is a crucial step towards public listing, Physics Wallah clarified that it does not guarantee the company will proceed with the IPO.

 

But if it goes ahead with the IPO, the firm will be the first edtech in India to get listed. The company had raised $210 million in 2024 at a valuation of $2.8 billion.

 

The company has rapidly grown in popularity, particularly among students preparing for competitive exams. Its online platform offers a wide range of courses and resources at competitive prices, making quality education accessible to a broader audience.

 

Its operating revenue grew by 160 per cent to ₹1,940 crore in financial year 2024 (FY24) against the previous year. But the losses soared too, nearly 13 times to ₹1,131 crore in FY24 from ₹84 crore last year.

 

Physics Wallah has become the sixth company to choose the confidential filing route for its IPO, following Indira IVF, which made a pre-filing last month.

 

Introduced in 2022, this mechanism allows companies to keep their draft red herring prospectus (DRHP) private until they finalise their listing plans.

 

Tata Play was the first company to utilise this route, though it eventually scrapped its IPO plans. Similarly, SoftBank-backed hotel aggregator Oyo made a confidential filing in 2023 but did not proceed with its IPO.

 

In April 2024, food delivery giant Swiggy also opted for the pre-filing route for its IPO. To date, only Swiggy and Vishal Mega Mart have successfully gone public after making confidential filings.

 

What is confidential filing?

 

The confidential filing route, introduced in 2022, enables companies to withhold sensitive information from the public domain until they are ready to proceed with their IPO. This approach helps issuers avoid unwarranted public scrutiny and opportunistic litigations. However, most companies still prefer the traditional route for filing their DRHPs with the Sebi, as it is often considered more cost and time effective.

 

Once Sebi issues its observations on the confidentially filed offer document, companies are required to make it public. The updated DRHP must remain in the public domain for at least 21 days, during which stakeholders can provide feedback. After this period, the company can move forward with its IPO.

 

Companies opting for the confidential filing route are permitted to conduct limited marketing to institutional investors to gauge demand and determine fair pricing. Additionally, Sebi’s observations for confidentially filed IPOs remain valid for 18 months, compared to 12 months for traditional filings.

 

If a company fails to launch its offering within this timeframe, the observations lapse, necessitating a re-filing of the offer document.