PhysicsWallah has begun scaling back its direct lending business as its wholly owned subsidiary, FinZ Finance, agreed to sell and transfer Rs 95.79 crore loan portfolio to Auxilo Finserve, an education-focused non-banking financial company (NBFC). The transaction marks a significant change in PhysicsWallah’s approach to student financing, with the edtech company planning to rely more on established third-party NBFCs instead of carrying lending exposure directly on its books.

The deed of assignment was executed on October 3, 2026, and the transition of the loans and borrowers is expected to be completed within 60 days, according to the company’s regulatory filing.

Key Highlights

• PhysicsWallah will transfer FinZ Finance’s Rs 95.79 crore loan portfolio to Auxilo as it scales back direct lending.
• PhysicsWallah plans to use regulated third-party NBFCs for student financing while focusing capital on core operations.

Why Is PhysicsWallah Selling Its Rs 95.79 Crore Loan Portfolio?

PhysicsWallah said the transfer is part of a broader strategic realignment aimed at focusing on its core education business and optimising capital allocation.

The company said the move is expected to improve operational efficiency while reducing the balance-sheet and credit risks associated with direct lending. Since lending is the principal activity of FinZ Finance, the transfer of a substantial portion of its loan portfolio will result in the partial or piecemeal closure of its lending operations.

The decision effectively shifts PhysicsWallah towards a more asset-light model, where financing can continue to support students without the company having to retain the same level of direct credit exposure.

What Is the Deal Between FinZ Finance and Auxilo Finserve?

Under the agreement, FinZ Finance will transfer its Rs 95.79-crore loan portfolio to Auxilo Finserve. The latter is an RBI-registered NBFC with a focus on education-sector financing. The transfer will also involve the transition of the associated borrowers, with the process expected to be completed over the next 60 days.

For PhysicsWallah, the arrangement provides a way to move away from direct lending while continuing to work with a regulated financial institution specialising in education finance.

Why Is PhysicsWallah Moving Away From Direct Lending?

FinZ Finance received its licence in September 2025 and began operations in early 2026. Its direct lending business was therefore relatively new when PhysicsWallah decided to restructure the segment.

The financing arm for PhysicsWallah student base had also been envisioned for the subsidiary, with the management earlier saying that about 70-75% of loans were being made to existing students on the platform.

This strategic change will allow PhysicsWallah to focus on its education business and third party NBFCs will focus on lending and related credit exposure.

What Happens to PhysicsWallah Students With Existing Loans?

The sale does not mean that student financing necessarily disappears. Instead, the existing loan portfolio is being transferred to Auxilo, with the borrower transition expected to take place over the next 60 days.

Going forward, PhysicsWallah has said lending activities are proposed to be facilitated through established and regulated third-party NBFCs. This suggests a partner-led financing model rather than the edtech company directly originating and holding loans on its own balance sheet.

For students, the key issue will be how the transition affects servicing, repayment processes, documentation and access to future education financing.

What Happens to PhysicsWallah’s Rs 120 Crore FinZ Finance Investment?

In May 2026, PhysicsWallah had outlined plans to invest Rs 120 crore in FinZ Finance through a rights issue. The subsequent decision to significantly reduce direct lending makes capital allocation within the subsidiary an important area for investors to monitor.

As of March 31, 2026, FinZ Finance had a net worth of Rs 60.30 crore, equivalent to around 1.18% of PhysicsWallah’s total net worth. Its total income was Rs 1.35 crore for the financial year, reflecting the fact that the lending business had only recently begun operations.

How Will PhysicsWallah Finance Students After the Lending Exit?

PhysicsWallah’s stated approach is to work with established, regulated third-party NBFCs. Rather than using its own balance sheet to fund loans, the company can facilitate financing for students through lending partners.

This model could allow PhysicsWallah to continue offering financing options while reducing its direct exposure to loan defaults, credit underwriting and balance-sheet risks.

The success of this strategy will ultimately depend on the availability and competitiveness of financing for students and the economics of PhysicsWallah’s partnerships with external lenders.

Also Read: PhysicsWallah Drops Direct Lending Plan, Partners with NBFCs

PhysicsWallah Share Price Today: Why Did the Stock Rise?

PhysicsWallah shares gained in Monday’s trading session after the announcement. The stock touched an intraday high of Rs 131.98 and was trading around Rs 130.80, up 8.85%, based on the market data available at 3:09 p.m. IST on October 5.

The market reaction came as investors assessed the lending restructuring as a move towards greater focus on the company’s core education operations and lower direct credit exposure.

However, the share-price movement alone does not establish the long-term financial impact of the transaction.

What Does the FinZ Finance Exit Mean for PhysicsWallah Investors?

The transaction represents a strategic shift rather than simply a loan-book sale. PhysicsWallah is reducing its direct exposure to financial services and returning its focus to its core education business.

Investors will now watch how quickly the loan portfolio transfer is completed, how FinZ Finance’s remaining operations are handled and whether the third-party NBFC model can preserve student financing without creating significant additional costs.

The company’s future financial performance will also determine whether the move improves capital efficiency while allowing PhysicsWallah to concentrate resources on its core edtech operations. PhysicsWallah performed well in Q2 FY26, reporting a 26% year-over-year increase in sales.