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Talwalkars Better Value Fitness (Q4 FY13)

India Infoline News Service | Mumbai |

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

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).  
Results table (consolidated)
(Rs m)Q4 FY13Q4 FY12% yoyFY13% yoy
Net sales50438730.41,52225.8
Staff(83)(56)48.3(312)25.6
Admin & other expenses(137)(117)17.2(471)17.0
Operating profit28421432.973932.3
OPM (%)56.455.3108 bps48.6237 bps
Depreciation(41)(29)42.2(146)24.4
Interest(21)(28)(24.6)(108)18.2
PBT22215741.748438.6
Tax(90)(45)100.5(158)52.1
Effective tax rate (%)40.427.91,251 bps32.7319 bps
Adjusted PAT13211218.232632.9
Adj. PAT margin (%)26.329.0(270) bps21.4113 bps
Extra ordinary items-4---
Minority int(11)(20)(45.2)(26)(10.2)
Reported PAT1219527.130036.4
Source: Company, India Infoline Research

Financial summary
Y/e 31 Mar (Rs m)FY12FY13EFY14EFY15E
Revenues1,1941,5221,8512,227
yoy growth (%)28.627.521.720.3
Operating profit5437398921,073
OPM (%)45.548.648.248.2
Reported PAT221301350457
yoy growth (%)37.536.316.530.5





EPS (Rs)9.112.514.519.0
P/E (x)16.912.410.78.2
P/BV (x)2.61.91.71.4
EV/EBITDA (x)9.47.36.45.1
Debt/Equity (x)1.10.80.80.6
RoE (%)16.317.015.617.5
RoCE (%)15.216.717.319.0
Source: Company, India Infoline Research
BSE 206.35 2.35(1.15%)
NSE 205.95 2.20(1.08%)
As on: 01 Jan 70, 05:30

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