Talwalkars Better Value Fitness (Q2 FY14) - BUY - IIFL

CMP Rs139, Target Rs190, Upside 36.7%

- Talwalkars Better Value Fitness (TBVF) reported ~24% yoy rise in net revenues driven by increase in consolidated gym base to 147 from 129 in Q2 FY13 of which 103 are owned gyms

- EBIDTA margin remained largely flat as higher admin expenses (probably due to an enlarged gym base yoy, advt expenses to support August launch etc) were offset by lower staff costs; company indicated that at same store level, revenue generation at August scheme was higher yoy with marginal rise in ad expenses

- PAT increased ~21% yoy as impact of lower interest cost (due to treasury income and August scheme cash flows) was countered by accelerated depreciation on key assets

- We expect continued traction from core gym business while newly launched services like Zumba, NuForm and Reduce would drive incremental EBIDTA; retain BUY with unchanged 9-12mth target Rs190.

Source : Equity Bulls

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