CMP Rs197, Target Rs235, Upside 19.3%
- Talwalkars consolidated Q2 net revenues rose 30% yoy driven by ~17% yoy rise in owned gym base, increase in subsidiary gym count and HiFi franchisee income; new initiatives like NuForm, Zumba classes and ‘Reduce’ also supported improved same store sales during the quarter
- Company took 6%-8% price hikes across gyms which did not do so in H1 CY12; despite higher prices, annual renewal rates increased to 76%, an indication of robust brand positioning
- Update on new initiatives: currently 6 NuForm studios operational in Mumbai and Thane with ~500 members; Zumba classes started in August 2012 in 15 gyms across India with member base of 160. Company launched Reduce-Diet Program in July 2012 in Bangalore and has ~225 members. Reduce food products are offered within the gym by dietician as part of diet program
- EBIDTA margin improved ~400bps yoy driven by lower admin & other expenses as opex costs expectedly lagged seasonally strong revenue growth; robust EBIDTA performance translated in to a ~47% yoy jump in reported PAT; company has achieved 54%/53% of our FY13 revenue/PAT forecasts in H1 FY13.
- On the back of a strong quarter, we retain our FY13/14 estimates and forecast revenue/PAT cagr of ~29%/35% over FY12-14; retain BUY with 9-mth tgt of Rs235.
|(Rs m)||Q2 FY13||Q2 FY12||% yoy|
|Admin & other expenses||(139)||(122)||14.5|
|OPM (%)||50.5||46.5||399 bps|
|Effective tax rate (%)||30.2||30.1||11 bps|
|Y/e 31 Mar (Rs m)||FY11||FY12||FY13E||FY14E|
|yoy growth (%)||43.0||28.6||31.7||27.3|
|yoy growth (%)||106.0||37.5||28.4||42.3|
BSE 303.55 2.65 (0.88%)
NSE 303.55 2.70 (0.90%)
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