Talwalkars Better Value Fitness: A multi-bagger in the making | Multibagger | IndiaNotes.com
Talwalkars Better Value Fitness Ltd (Talwalkars) offers a unique play to participate in India’s burgeoning fitness industry. Talwalkars is not only the market leader by far but is twice as large as the next best peer. It has grown its pan India presence through a judicious combination of owned and franchise centres, which are housed under four brands that address all strata of society. Talwalkars has also added a number of non-equipment based fitness programs, viz. Zorba, Zumba, etc., which have a high ROE.
With a view to attract the non-gyming and “busy, on the go” segment, Talwalkars has introduced ‘Reduce and Nuform’ programs, which have been well received. Its recent tie-up with Mickey Mehta, a fitness celebrity, will go a long way in further improving the attractiveness of its non-gym business.
Over the period FY14-17, the earnings of Talwalkars have grown at a healthy CAGR of 21.5% to Rs. 65.6 crore, return ratios – ROE and ROCE – have remained relatively pedestrian (considering the fact that the service industry typically has higher ratios). Hence, with a view to unlock value, Talwalkars is looking to demerge its two businesses – the gym business and lifestyle business. This will bring to fore the superior shareholder returns of the Gym Co. leading to a sharp re-rating.
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