PK joins a new school, but trouble follows him. Parvathi, the vice principal, plans to fix the school's prestige by forming a basketball team, but PK has sworn off the game.
Disappointed with PK's behaviour, VP demands to see him, but he skips school to avoid facing her. Worried, Abel tries desperately to reach him.
PK goes back to school in search of the person who put the joint in his bag. He is sent to the VP's room and gets rebuked for ruining the school's reputation.
Chandru suffers as his family is stuck in a complicated situation, and his sister is his only moral support. He vents his frustrations on PK, and PK does not back down.
PK and Chandru face VP's wrath, but things take an unexpected turn for them. PK recollects events and incidents from his previous school, and gains perspective towards this school.
Cultural fever begins at KB School. PK gets a bitter-sweet surprise on his birthday. While Guru and Kalidas decide to partake in fashion show, PK is in a dilemma about his past.
PK meets Sanjana, and they share an unexpected evening together. Influenced by the experience, PK realises he needs closure, leading him to play once more for that elusive victory.
PK convinces the VP to let him assemble a team, but she refuses his request. Meanwhile, Guru and Kaali are in the process of recruiting girls for the fashion show.
PK tries to introduce basketball, hoping to form a team to compete in a tournament, but encounters a lack of interest. Meanwhile, Guru and Kaali's friendship is put to the test.