Talwalkars Better Value Fitness Ltd. share price target

Talwalkars Better Value Fitness Limited (TBVFL) the old entity has demerged its business to two companies- a gym company and a lifestyle company. The gym company, earlier known as Talwalkars Lifestyle Ltd.' has...

Talwalkars Better Value Fitness Limited (TBVFL) - the old entity - has demerged its business two companies - a gym company and a lifestyle company with the aim of maximizing the overall shareholder value. The gym...

Sector: Miscellaneous /Small-Cap | Earnings Update 4QFY18 Background: TBVF has spun off GYM business as per the ratio of cost of acquisition i.e. 71.04% equity of the combined entity to the new entity which will be listed shortly. The existing entity i.e. TBVF, operates lifestyle business such as Reduce, Nuform, Zumba, Zorba, Dr. Mickey Mehta wellness and club. In FY18, Lifestyle business revenue, EBITDA and PAT grew 17%, 26% and 43% respectively. Nuform is currently operated in 76 centers and Zorba (78 centers). Club is expected to be operational in the next 9-12 months and the membership rollout is expected to commence from mid 2018....

On March 27, 2018, TBVFL clarified that other than the core gyming business, the existing listed entity has retained all the other businesses. The recent steep fall witnessed in the share price of the existing listed entity is solely due to the demerger process and is reflecting the true value of the companys Lifestyle business, Which is relatively much smaller in size compared to the gym business.

ICICI Securities Ltd | Retail Equity Research Talwalkars had made an announcement of a de-merger on November 24, 2016. The ratio was one share of Talwalkar Lifestyles (TL) for every share of Talwalkar Better Value Fitness (TBVF). The stock has turned ex-date today while the record date for the same is March 28, 2018. Consequently, Talwalkar's share price, as per yesterday's closing price, has dropped to | 198/share from | 242/share. Hence, now our target price also stands revised to | 215/share for Talwalkar Better Value Fitness....

Talwalkars Better Value Fitness Ltd. (TBVFL) reported in line numbers for Q3FY18 with net revenue and PAT growth of 10.2% & 23.2% YoY respectively. Driven by cost efficiencies, EBITDA margins expanded 17bps YoY to 45.2%.

Talwalkars reported weak Q3FY18 results that broadly remained below our estimates. Revenues increased 10.2% YoY to | 54.8 crore (below I-direct estimate of | 61.0 crore). On the margin front, the EBITDA margin expanded merely by 21 bps...

Talwalkars Better Value Fitness Ltd. (TBVFL) reported a lower than estimated net revenue growth of 10.1% YoY in Q2FY18, while PAT growth was more or less in line at 25.3% YoY, aided by higher other income and lower effective tax rate. Driven by cost efficiencies, EBITDA margins expanded 284bps YoY to 61.7%, which was encouraging.

We initiate coverage on Talwalkars as a BUY with a price objective of Rs. 728, representing a potential upside of 173%, over a period of 24 months.

In order to have better management and clear focus of its business activities, Talwalkars has proposed to demerge into two companies (likely to happen by Q3FY18) Gym (Pure Gym business) and Lifestyle (Fitness club + Property + Zorba + Reduce + Nuform etc.). The Gym Co. will retain the name as Talwalkars Better Value Fitness Ltd. (TBVFL) while the lifestyle company will be named as Talwalkars Lifestyles Ltd. As a result of demerger, the financial parameters will improve significantly, debt in Company will reduce, result in high double-digit ROCE, more cash on the books, and for other non- gym business will be transferred to the Lifestyle Company, thus improving the Debt Equity ratio of Gym Co....

Talwalkars Better Value Fitness Ltd. (TBVFL) reported inline numbers for Q1FY18 with a net revenue and PAT growth of 12.9% & 28.9% YoY. Led by cost efficiencies, EBITDA margins expanded 200bps YoY to 50.2%, which was encouraging.

Talwalkars' Q1FY18 results are not directly comparable with our estimates due to adoption of new accounting standard (Ind-As). Under Ind-As, the company reported revenues net of service tax. Adjusting for service tax, revenues increased 12.9% YoY to | 56.7 crore (marginally below I-direct estimate of | 59.7 crore) mainly led...

Restructuring (demerger) process at a fag end The Company management is currently executing restructuring process wherein current organization is likely to be divided into two entities i.e. Gym (Pure Gym business) and Lifestyle (Fitness club + Property + Zorba + Reduce + Nuform etc.). Post restructuring, both entities are likely to be listed. The Shareholders of the Company has approved the scheme with the requisite majority and the final approval by the NCLT is awaited. The Company has already received the approval from the stock exchanges and SEBI to the Scheme of Arrangement. Post the NCLT approval, the management expects the process of...

000 members in Q3 with an aim to leverage on the low capex model (Rs 1.75-2.25 crs vs Rs 3.7 crs for Talwalkars original format) and thereby enhance return on capital. Talwalkars has signed a MoU to acquire 50.01...

Talwalkars Better Value Fitness Ltd (TBVFL) reported inline numbers for Q4FY17 with a revenue and PAT growth of 17% & 23.6% YoY. Led by cost efficiencies, EBITDA margins expanded 274bps YoY to 70.7%, which was encouraging.

Talwalkars reported a mixed set of Q4FY17 numbers. Revenues increased 16.9% YoY to | 104.9 crore (below I-direct estimate of | 109.5 crore) mainly led by an improvement in same store sales growth (SSS) and addition of new gyms EBITDA margin increased 241 bps YoY to 61.7% (above I-direct estimate of 59.7%) due to operating leverage benefit Approval for the proposed re-organisation of TBVF's business into gym company & lifestyle company may be received by Q1FY18E....

Talwalkars Better Value Fitness Ltd (TBVFL) reported in-line numbers for Q3FY17 with a revenue and PAT growth of 14.4% & 13.9% YoY. Led by lower operating cost, EBITDA margins expanded 260bps YoY to 49.5%. With steady gym additions, healthy same store sales growth and higher contribution from value added services, we expect healthy growth momentum in revenue and profit to continue.

augurated 20 gyms together on 8th November, 2016 in Bengaluru which has received an encouraging response. The new gyms received ~ 2,800 memberships despite of Demonetisation. o The Company has witnessed increase in Cashless transactions since Demonetisation o The Company has received good response to the rental negotiations in the current quarter resulting in reduction in rent in the coming quarters. Restructuring (demerger) process at a fag end The management is currently executing restructuring process wherein current organization is likely to be divided into...

Background: TBVF is one of the India's largest fitness chain and holds ~10% market share. TBVF has over 198 health clubs and gyms across 85 cities and towns of India and Sri Lanka with member base of over 200,000+. They have 103 owned gyms, 9 gyms subsidiary, 20 gyms Associates, 18 Franchisee gyms, 20 Power World Gyms, Zorba (3) and 25 HI-FI format gyms. Geographic distribution of gyms: West (37%), North (22%), South (36%) and East (5%). Urban, semi-urban mix's of gym: Tier...