Physicswallah Limited has strengthened its position in Xylem Learning Private Limited through a strategic amendment to their existing shareholders agreement. The company's board of directors approved the third amendment, marking another significant step in the ongoing acquisition process.

Key Acquisition Details

The third amendment facilitates the acquisition of an additional 930 equity shares from existing shareholders, representing a substantial increase in ownership stake. This transaction builds upon the original shareholders agreement entered into on June 17, 2023, which has been previously amended on June 18, 2023, and February 07, 2025.

Revised Commercial Framework

The amendment introduces significant changes to the acquisition structure and valuation methodology. The tranche-wise acquisition terms have been comprehensively revised, including modifications to the number of equity shares proposed for acquisition under remaining tranches.

The valuation mechanism has undergone a fundamental shift, with the framework now based exclusively on EBITDA metrics. Key changes include:

• 100% weightage assigned to EBITDA for valuation purposes
• Increased EBITDA valuation multiples for remaining tranches
• Elimination of revenue metrics from the valuation framework

Strategic Alignment

According to the company's disclosure, these amendments are designed to align the acquisition schedule and commercial terms with Physicswallah's strategic objectives. The revised structure provides greater clarity and focus on profitability metrics rather than revenue-based valuations.

Regulatory Compliance

The transaction falls within the ambit of related party transactions and is conducted at arm's length, given Xylem's status as a subsidiary of Physicswallah Limited.

The parties to the amended agreement include Physicswallah Limited, Xylem Learning Private Limited, and individual shareholders Mr. Anthu Sasikumar, Mr. Vinesh Kumar Karuvarathpoyil, and Mr. Lijeeshkumar Valiyaparambil. This strategic acquisition reinforces Physicswallah's commitment to expanding its educational technology portfolio through controlled subsidiary operations.

Physicswallah Limited delivered impressive financial results for the second quarter of fiscal year 2026, demonstrating strong growth across key metrics and maintaining its trajectory toward sustained profitability.

Financial Highlights

The company's Q2 FY26 performance showcased robust growth across multiple parameters:

User Base and Engagement Metrics

PhysicsWallah continued to expand its reach with significant improvements in user engagement:

• Paid users reached 3.62 million in H1 FY26, up from 2.99 million in the previous year
• Online Average Cost Per User (ACPU) increased by 8%
• Monthly active users to daily active users ratio remains strongest among consumer internet companies
• Average time spent by paid users: 100-120 minutes daily

Business Segment Performance

The company maintained balanced growth across its online and offline channels:

Offline Expansion Strategy

PhysicsWallah's offline presence continued to strengthen with 314 operational centers. The company's unique tech-enabled offline model shows promising unit economics:

• 72 out of 117 Vidyapeeth centers are now profitable
• Typical center investment: ₹2.50 crores with structured profitability timeline
• 80% of offline admissions originate from online learner base
• Plans to open 75 new centers in the upcoming year

Market Position and Diversification

The edtech leader has successfully diversified beyond its core JEE and NEET offerings:

• JEE and NEET now represent 31% of total enrollment, down from 36% previously
• Strong market share of 20% in early exam categories with 30-40% penetration in Hindi heartland
• Expansion into government exams, state boards, and professional courses showing positive traction
• Overall market share remains below 2%, indicating significant growth potential

Strategic Initiatives

Management highlighted several key strategic developments during the earnings call:

• Successful acquisition of 40% stake in Sarrthi IAS for UPSC domain expansion
• Implementation of Faculty Training Program reducing teacher costs while maintaining quality
• Enhanced data-driven approach for center location selection
• Separate reporting of online and offline business profitability planned from April 2026

Financial Position

The company maintains a strong balance sheet with ₹25,519.00 million in treasury assets and generated ₹6,441.00 million in free cash flow, providing substantial resources for future expansion and strategic investments.

With Q3 traditionally being the company's strongest quarter, management expressed confidence in continued growth momentum while maintaining focus on sustainable profitability across all business segments.