CMP Rs154, Target price Rs210, Upside 35.5%
- Talwalkars BVF posted a strong 30% yoy rise in net revenues driven by higher gym additions yoy; company added 29 gyms under all formats in FY13 and has a gym base of 144 of which 101 are owned gyms
- Q4 margins expanded by 108bps yoy on tight control in admin and other expenses though staff costs did rise on the back of newly recruited Zumba trainers and marketing for ‘Reduce’ (weight loss) program
- PAT jumped 27% yoy led by robust EBIDTA growth (+33% yoy) and lower interest costs (-24.6% yoy) due to better treasury management and deployment of QIP funds to reduce interest expenses
- Net debt to equity declined to an estimated 0.6x in FY13 from 0.9x in the previous fiscal while absolute debtors showed commendable decline (Rs177mn vs Rs201mn in FY12) despite 28% yoy increase in FY13 net sales
- Company has indicated that it would add 20-30 fitness centres in the current fiscal under various formats; however, along with volume growth, it would also focus on same store sales growth through several value added offerings like Zumba, NuForm and Reduce. We revise lower our FY14 EPS estimates based on FY13 actual figures and shift target PE multiple on FY15 earnings; retain BUY with revised 9-12 mth tgt of Rs210 (earlier Rs235).
|(Rs m)||Q4 FY13||Q4 FY12||% yoy||FY13||% yoy|
|Admin & other expenses||(137)||(117)||17.2||(471)||17.0|
|OPM (%)||56.4||55.3||108 bps||48.6||237 bps|
|Effective tax rate (%)||40.4||27.9||1,251 bps||32.7||319 bps|
|Adj. PAT margin (%)||26.3||29.0||(270) bps||21.4||113 bps|
|Extra ordinary items||-||4||-||-||-|
|Y/e 31 Mar (Rs m)||FY12||FY13E||FY14E||FY15E|
|yoy growth (%)||28.6||27.5||21.7||20.3|
|yoy growth (%)||37.5||36.3||16.5||30.5|
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