Talwalkars Better Value Fitness (Q1 FY13)

India Infoline News Service | Mumbai |

Q1 net revenues grew 19.4% yoy (QoQ not meaningful due to strong seasonality) led by increase in owned as well subsidiary gyms

CMP Rs157, Target Rs190, Upside 21%

  • Q1 net revenues grew 19.4% yoy (QoQ not meaningful due to strong seasonality) led by increase in owned as well subsidiary gyms; the consolidated gym base now stands at 130, of which 92 are owned and 10 are HiFi gyms

  • EBIDTA margin was virtually flat at 36.5% as 30bps yoy decline in staff cost nullified by 48bps yoy rise in admin & other expenses related to opening of new gyms; a lower tax rate supported ~40% yoy surge in reported PAT

  • New initiatives: Company has launched ‘NuForm’, a new category of health and fitness studio, which focuses primarily on weight loss and caters to affluence class with a membership fee (Rs42k p.a) higher than that of regular gym; currently 6 NuForm studios with a member base of about 400 are operational in Mumbai. In addition, Talwalkars has also launched ‘Zumba’ fitness program in 11 locations wherein average aerobics fee is ~Rs750/month while that for Zumba classes is Rs2,500 /month generating ~3x more of aerobics fee; company expects these 2 initiatives to improve average revenue per customer and widen membership base

  • We broadly retain our FY13/14 estimates and forecast revenue/PAT cagr of ~24%/31% over FY12-14; maintain BUY with 9-mth tgt of Rs190.

Results table (consolidated)
(Rs m) Q1 FY13 Q1 FY12 % yoy
Net sales 257 215 19.4
Staff (65) (55) 18.0
Admin & other expenses (98) (81) 20.9
Operating profit 94 79 18.8
OPM (%) 36.5 36.7 (18) bps
Depreciation (33) (28) 17.2
Interest (25) (22) 13.7
PBT 36 29 24.4
Tax (5) (6) (11.0)
Effective tax rate (%) 14.1 19.6 (559) bps
Adjusted PAT 31 23 33.1
Adj. PAT margin (%) 11.9 10.7 123 bps
Minority int (3) (3) (11.8)
Reported PAT 28 20 39.6
Source: Company, India Infoline Research

Financial summary
Y/e 31 Mar (Rs m) FY11 FY12 FY13E FY14E
Revenues 928 1,194 1,618 1,828
yoy growth (%) 43.0 28.6 35.6 12.9
Operating profit 401 543 730 828
OPM (%) 43.1 45.5 45.1 45.3
Pre-exceptional PAT 164 217 286 379
Reported PAT 160 221 286 379
yoy growth (%) 106.0 37.5 29.8 32.3
         
EPS (Rs) 6.7 9.1 11.9 15.7
P/E (x) 23.6 17.2 13.2 10.0
P/BV (x) 3.0 2.6 2.2 1.9
EV/EBITDA (x) 11.8 9.5 7.3 6.2
Debt/Equity (x) 1.0 1.1 1.1 0.8
RoE (%) 19.1 16.3 18.3 20.3
RoCE (%) 16.4 15.2 17.4 18.0
Source: Company, India Infoline Research
 
BSE 304.00 3.60 (1.20%)
NSE 303.40 2.60 (0.86%)

***Note: This is a NSE Chart

 

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