Earnings Update - Talwalkars Better Value Fitness (TBVF IN) - Results on expected line - CSEC Research

Results on expected line

- In 4QFY17, Revenues up 16.9% YoY (+74.3% QoQ) at INR 1,049mn. Revenue per gym decreased by 2.5% YoY to INR 4.97mn.

- EBITDA stood at INR 631mn, up 14.9% YoY (+138.2% QoQ). EBITDA margin marginally fell by 106bps YoY to 60.2%. Employee cost up 28bps YoY to 9.1% and sales and administrative cost was down 268 bps YoY to 16.5%; Interest expense was down by 164bps YoY to 4.42% of sales. Reported PAT grew by 21.8% YoY to INR 246mn in 4QFY17. Reported PAT margin improved by ~10bps YoY to 25.5%.

- In 4QFY17, company has added 13 centers (PWG: 10, Zorba: 2 and HiFI: 1). Company has added 10 gyms in Delhi in Mar 2017 under Power World Gym Brand and post this TBVF has emerged as a one of the top player in Delhi.

Valuation: We continue to remain positive on the fundamentals of the business, the company's ability to constantly innovate to improve the same store sales by offering newer services, prowess in implementing & running gyms and a strong business model. At CMP of INR 279, the stock is trading at 15.6XFY18E and 13.7XFY19E adj.earnings. We assign a target price of INR 305 based on target P/E of 15XFY19E Adj.EPS and assign an OUTPERFORMER rating.

Risks: Escalation in rentals, availability of property in a good location and increasing competition from both domestic and foreign players.

Shares of Talwalkars Better Value Fitness Ltd was last trading in BSE at Rs.278.6 as compared to the previous close of Rs. 279.25. The total number of shares traded during the day was 11817 in over 224 trades.

The stock hit an intraday high of Rs. 280.35 and intraday low of 275.65. The net turnover during the day was Rs. 3292992.

Source : Equity Bulls

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