What levers must Physics Wallah pull to crack the South?

Core Insights - Physics Wallah (PW) has faced challenges in its expansion into the southern Indian market, particularly in Kozhikode, which was initially a strong revenue contributor but has seen a significant decline in revenue and market position [2][10][19] - The company aims to leverage its recent IPO funding to enhance its presence in the South, where it currently has low penetration compared to its established competitors [3][9][22] - The southern test-prep market is highly competitive, with established players like Sri Chaitanya and Narayana Group generating substantial revenue, highlighting the challenges PW faces in gaining market share [18][30] Company Performance - In FY25, PW's operating revenue increased by 49% to approximately ₹2,887 crore, while its net loss narrowed to around ₹243 crore, indicating improved financial health [19] - The company's initial public offering (IPO) raised ₹3,100 crore, with a portion earmarked for expanding its offline presence in the South [3][15] - Despite its reach of over 4 million paid students, PW's performance in competitive exams has been underwhelming, raising questions about the effectiveness of its coaching methods [24][25] Market Strategy - PW plans to open at least 13 new Xylem centres and expand its offline footprint significantly, with a total of about 95 new Vidyapeeth centres and 107 additional offline centres over the next three years [15][16] - The company is focusing on online penetration as a primary strategy for entering the southern market, with offline expansion being a secondary goal [34] - The southern market is characterized by a different educational ecosystem, requiring PW to adapt its successful northern model to local preferences and competition [34][39] Competitive Landscape - The southern test-prep market is projected to grow rapidly, with estimates suggesting it could approach ₹2 trillion by FY30, driven by demand for JEE and NEET coaching [17] - Established competitors in the South have a stronghold due to their integrated school-coaching models, which differ significantly from PW's approach [26][30] - The market is not homogeneous, with distinct regional characteristics influencing educational priorities and coaching effectiveness across states like Andhra Pradesh, Kerala, Karnataka, and Tamil Nadu [31][32]