ETtechFor India’s test-preparation segment, 2025 was a year of significant transformation.
It entered the year with relatively stable demand, driven by competitive entrance exams and outcome-linked offerings. This helped companies like PhysicsWallah, Allen, Unacademy, Aakash, and Adda247 grow even as other parts of the edtech sector struggled with slowing enrolments and weaker business models in the period following the pandemic.
And, as the year comes to a close, a public listing, faster offline expansion, broader course offerings and renewed merger discussions have altered how test-prep companies are positioning themselves.
While some are scaling operations, others are exploring consolidation, even as a few face mounting financial and operational pressures.
In November, WestBridge Capital-backed PhysicsWallah listed on stock exchanges following a Rs 3,480 crore initial public offering, including Rs 3,100 crore in fresh capital. The listing was the first by a large test-prep company and came at a time when much of the sector was dealing with financial stress. This was a positive signal not only for the test-prep segment but for the wider edtech space, which had been grappling with the impact of Byju’s downfall.
Now Unacademy is in discussions with Ronnie Screwvala-founded higher learning company Upgrad to get acquired at a price that is less than a tenth of its last valuation.
Standout segment
Investors and founders broadly agree that test-prep remains the healthiest pocket of Indian edtech. Student volumes continue to rise, competition for exams is intensifying, and demand from tier-II and tier-III cities is expanding steadily.
“Test-prep stands out as an attractive segment, driven by high learner intent, outcome-oriented models, and predictable monetisation. With blended online-offline models and favourable demographics, test preparation remains a structurally strong, long-term growth category,” said Sandeep Singhal, cofounder and managing partner at WestBridge Capital, which has backed the likes of PhysicsWallah and Adda247 in the test-prep space. It has also invested in other edtechs such as Lead School, Vedantu and K-12 Technoservices.
Companies are now expanding beyond a single-exam category and building platforms that span multiple competitive tests and formats. Investors say this shift reflects an effort to capture a wider share of student spending while relying on test preparation as the core business.
“The segment is heading towards large, multi-category, omnichannel platforms that serve everything from JEE/NEET to government, postgraduate exams, skills and language learning, on top of a strong test prep core,” said Dev Khare, partner at Lightspeed. To get there, most players are lowering fees, experimenting with flexible pricing, and pushing hybrid delivery models to grow enrolments. While this has broadened access, it has also put pressure on margins, making scale and cost control increasingly critical.
ETtechThe offline bet: growth engine or cost trap?
PhysicsWallah, which began as a YouTube channel, has emerged as the most aggressive proponent of the offline expansion. It operated 314 physical centres as on September 30 and plans to expand to 500 over the next three years.
“Only platforms with a strong online foundation can successfully scale offline. In our experience, a large number of our offline students had studied with us online first,” said PhysicsWallah cofounder Prateek Maheshwari. The company’s revenue is now almost evenly split between its online and offline businesses.
In its first quarterly results as a listed company, PhysicsWallah reported a 26% year-on-year increase in operating revenue, at Rs 1,051 crore for the July-September period, alongside a 70% rise in net profit to Rs 70 crore.
The offline expansion also reflects a broader shift in student preferences. Increasingly, students are opting to study closer to home rather than relocate to traditional coaching hubs, particularly for exams such as UPSC and other competitive tests.
Kota no longer the centre of gravity
Allen Career Institute, long synonymous with Kota, Rajasthan, now makes nearly 75% of its revenue from outside the so-called coaching capital of India. The company has expanded aggressively since the pandemic, responding to disrupted enrolments, rising competition from edtech platforms, and growing scrutiny around student welfare.
Allen currently operates more than 300 coaching centres across 77 cities, including markets such as Bengaluru, Delhi, Chandigarh, Ahmedabad, Lucknow, Patna, Mumbai and Hyderabad.
“Our approach to test preparation continues to centre on structured classroom learning, close faculty engagement and regular assessment,” said Nitin Kukreja, chief executive of Allen. “Over the past three months, we have expanded our physical footprint with the addition of 38 new classroom complexes.” The company serves over 3,50,000 students through its offline centres.
Despite the renewed push towards physical centres, executives acknowledge that offline education remains a capital-heavy business. Real estate costs, in-person faculty, fixed overheads and upfront investments make rapid expansion risky, particularly beyond large cities.
Adda247, for instance, continues to prioritise online delivery for students outside major urban centres. According to founder and chief executive Anil Nagar, physical centres are viable mainly in tier-I and select tier-II cities.
“Centres can work in places such as Delhi, Indore and Lucknow, but may not be sustainable in smaller towns like Sitapur or Itawa,” Nagar said. About 80-90% of Adda247’s online user base comes from tier-III and tier-IV markets, reinforcing the limits of an offline-only strategy.
Mixed financial performance
Financial outcomes across the sector remain uneven. Allen continues to be among the few consistently profitable players, though its net profit dropped to Rs 29 crore in FY25 from Rs 136 crore the year before, and revenue slipped to Rs 3,112 crore from Rs 3,245 crore.
PhysicsWallah reported revenue of Rs 2,887 crore in FY25, up from Rs 1,941 crore in FY24. Its loss narrowed to Rs 243 crore from Rs 1,131 crore.
Unacademy, meanwhile, saw its revenue fall 16% to Rs 826 crore in FY25, according to people familiar with the matter. The company has yet to file its results with the Registrar of Companies, while Aakash has not filed its financials since FY23. Google-backed Adda247 reported largely flat revenue of around Rs 240 crore in FY25, with its net loss widening marginally to Rs 104 crore from Rs 101 crore in FY24.
The year also exposed financial and operational stress on parts of the sector. In the first half of 2025, FIITJEE, one of India’s oldest coaching institutes, shut shop in several cities after it was unable to pay teachers. Subsequent findings by the Enforcement Directorate pointed to financial irregularities and alleged siphoning of funds at the institute.
Overall, the test-preparation market is becoming more concentrated with large players expanding across formats and exam categories and others exploring mergers, acquisitions, or asset sales. Companies are also under increasing pressure to scale while managing costs.
As a result, the sector is moving towards fewer, larger platforms with a presence across online and offline channels, alongside smaller, specialised, regional players. How this shift affects pricing, access, and learning outcomes will become clearer as companies continue to expand and consolidate over the coming years.