Short term Target: Rs. 190; Long term Target Rs.250; STOP LOSS – Rs. 158.00; Market Cap: Rs. 417.68 Cr; 52 Week High/Low: Rs. 265.00 / Rs. 107.00
TBVF has rolled out 19 gyms in 9M FY12 and it is slated to launch another 16 gyms in Q4, a traditionally strong quarter for the fitness business. This would take its total gym base to 126 of which about 90 would be owned and rest would be through a combination of subsidiaries, franchisees/JVs and HiFi gyms. Company plans to add 8 HiFi gyms in the current year through franchisee route which would not entail any capex for the company. In order to accelerate roll out in Tier II & Tier III cities, Talwalkars has conceptualized gyms under the ‘HiFi’ brands. These would be rolled out in areas with population of 3,00,000 – 5,00,000 which otherwise may not have supported a fully fledged Talwalkars gym. For instance, company has targeted HiFi gyms roll out in cities like Porbander, Faridabad and Solapur. These are typically ‘no frills’ gyms with area of 2,500 - 2,800 sq ft & about half of that is for a regular gym. HiFi gyms capex requirement is about half of a full service gym and their membership rates are also 60 % more of those of regular gyms. The company would roll out HiFi gyms through the franchisee route thereby eliminating funding needs for the roll out. In return for gym management, TBVF will earn royalty income at the rate of 6 % of revenues for first three years and 8 % thereafter. Talwalkars would also receive a one-time royalty income and equipment supply charge to the tune of Rs.10,00,000 each. HiFi gyms offers faster roll out since each roll out usually takes 8-10 weeks as compared to 14-16 weeks for typical Talwalkars gym and so HiFi gyms is the better road for Talwalkars to go ahead.
|SALES (Rs. Crs)||92.80||117.20||160.50||202.20|
|NET PROFIT (Rs. Crs)||16.00||20.50||26.90||36.50|
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