Buy Talwalkars Better Value Fitness; target of Rs 373: CD Equisearch

CD Equisearch's research report on Talwalkars Better Value Fitness

Talwalkars has signed a MoU to acquire 50.01% stake in Force Fitness India Pvt Ltd. (SNAP; India’s third largest gym company and the exclusive master franchise in India of ‘Snap Fitness Inc.’. USA) which will lead to an addition of 60 SNAP gyms into an existing nationwide network of Talwalkars (191 outlets) and access to a strong management team of SNAP India with considerable experience in franchising.

Outlook

Talwalkars proposition to demerge into two companies – Gym Co. and Lifestyle Co. should help it expand both organically and inorganically. We retain our “buy” rating on the stock with revised target of Rs 373 (previous target of Rs 338) based on 11x FY19e EPS of Rs 33.94 (peg ratio 0.5), over a period of 9-12 months.