Talwalkars Better Value Fitness - SBICap Securities

Talwalkars Better Value Fitness Ltd (TBVFL) is India's largest and leading health club operating chain providing Fitness Training, Nutrition Centre and value add on services like Spa, Aerobics and Spinning. It has set up 130 health clubs in 69 cities across 18 states under the brand name of Talwalkars and Hi-Fi and it has captured a market share of ~10% in the Indian organized fitness space.

Given the strong brand equity, introduction of new service offerings such as Nuform and Zumba and rapid expansion across India via Hi-Fi and subsidiary model, we expect TBVFL to witness exponential growth in its top line and bottom-line in the years to come. We initiate coverage on the stock with a BUY rating.

We expect TBVFL to register revenue growth at a CAGR of 30% from Rs131cr in FY12 to Rs283cr in FY15E on the back of aggressive gym roll out, increasing customer base and new service offerings We have value TBVFL at 40% discount of average EV/EBITDA multiple of its international peers as it is in growth stage and operating in emerging market. We arrived at EV/EBITDA multiple of 4.8 which results in a target price of Rs 205, an upside of ~31%.

Source : Equity Bulls

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