Talwalkars Better Value Fitness (Q3 FY13)

India Infoline News Service | Mumbai |

Talwalkars Better Value Fitness (Q3 FY13)

CMP Rs173, Target Rs235, Upside 35.8%

  • Talwalkars BVF posted ~16% yoy rise in net revenues supported by increase in same store sales and beneficial impact of new initiatives like Nuform, Zumba and Reduce; the company now has 137 gyms on consolidated basis including 95 owned gyms

  • EBIDTA margin improved 252bps yoy mainly led by lower staff expenses (-261bps yoy) on better staff utilization across a larger gym base

  • Interest expenses jumped 80% yoy but a lower effective tax rate drove 33.5% yoy growth in PAT; company raised ~Rs424mn through a QIP issue of ~2.1mn shares at Rs205 each

  • Company has entered in to a collaboration with David Lloyd Leisure, Europe’s leading health sports and leisure club chain to form Talwalkars David Lloyd Leisure Consulting and would offer execution, mgmt and consulting services for leisure and sports clubs; co has also signed Master Franchisee for 6 HiFi gyms in Maharashtra

  • Member base for NuForm now exceeds 1,100 and NuForm has achieved breakeven in the current quarter and is now EBIDTA accretive  

  • In the current quarter, co & its subsidiaries has taken over trademark licensed gyms in Pune which now stand reduced to 6 gyms from earlier 10 gyms; it has acquired the licensed gym centres without paying any EBIDTA multiple  

  • Company is set to add 10-14 gyms during the quarter and targets 100 Zumba centres from 15 currently as well as Reduce program in 75 fitness centres from 5 centres presently by FY14. Retain our FY13/14 estimates and forecast 35% PAT cagr over FY12-14; maintain BUY with 9-mth tgt of Rs235.

Results table (consolidated)
(Rs m) Q3 FY13 Q3 FY12 % yoy 9m FY13 % yoy
Gross sales 288 244 18.1 1,137 25.8
Less: service tax (29) (22) 35.6 (119) 47.1
Service tax (%) 10.2 8.9 - 10.5 -
Net sales 259 222 16.4 1,018 23.7
Staff (55) (53) 3.8 (229) 19.0
Admin & other expenses (96) (82) 16.7 (334) 17.0
Operating profit 107 87 23.9 455 31.8
OPM (%) 41.5 39.0 252 bps 44.7 277 bps
Depreciation (36) (30) 17.0 (106) 18.7
Interest (30) (17) 80.0 (86) 37.6
PBT 42 40 5.7 262 36.0
Tax (8) (16) (52.3) (69) 15.6
Effective tax rate (%) 18.4 40.9 (2,247) bps 26.2 (462) bps
Adjusted PAT 34 23 45.7 194 45.1
Adj. PAT margin (%) 13.2 10.6 266 bps 19.0 281 bps
Minority int (5) (1) 258.4 (14) 76.8
Reported PAT 29 22 33.5 179 43.1
Source: Company, India Infoline Research

Financial summary
Y/e 31 Mar (Rs m) FY11 FY12 FY13E FY14E
Revenues 928 1,194 1,572 2,001
yoy growth (%) 43.0 28.6 31.7 27.3
Operating profit 401 543 725 926
OPM (%) 43.1 45.5 46.1 46.3
Reported PAT 160 221 283 403
yoy growth (%) 106.0 37.5 28.4 42.3
         
EPS (Rs) 6.7 9.1 11.7 16.7
P/E (x) 26.0 18.9 14.7 10.4
P/BV (x) 3.3 2.9 2.5 2.0
EV/EBITDA (x) 12.7 10.2 7.8
BSE 304.00 3.60 (1.20%)
NSE 303.40 2.60 (0.86%)

***Note: This is a NSE Chart

 

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