Stock watch: Talwalkars better value fitness

The rise in the number of lifestyle diseases has reaffirmed the necessity for staying fit.Along with fitness, a new trend of complete wellness is gaining ground within the age group of 20-44. These people are trying out various ways to stay fit such as Zumba, aerial yoga, pilates, mixed martial arts and kickboxing, among others.

Analysts predict that the entire sector is set to grow annually by 20-30% YoY. The stock currently trades at 12.1x FY2017 and 9.5x FY2018 estimated EPS. The intention to forge a joint venture with David Lloyd Leisure Limited (Europe's leading premium sports, health and leisure group) for the development of 7-10 clubs in India along with demerger one focusing on gyms and the other focusing on properties and value added servicesis symbolic of renewed focus.

Transformation into a wellness company (better services and infrastructure) will further make its offerings more ecliptics. Growing disposable income and awareness regarding fitness augurs well for the business expansion and helped it in displaying 6 year OPMs57.1%.


Average earnings growth of 21.5% over the next two years is doubtless worthy of notice.We retain our buy rating on Talwalkars Better Value Fitness and increase our target price from Rs 319 to Rs 338.

- CD Equisearch