Buy Talwalkars Better Value Fitness; target of Rs 378: Way2wealth

Way2wealth's research report on Talwalkars Better Value Fitness

The Company management is currently executing restructuring process wherein current organization is likely to be divided into two entities i.e. Gym (Pure Gym business) and Lifestyle (Fitness club + Property + Zorba + Reduce + Nuform etc.). Post restructuring, both entities are likely to be listed.

Outlook

At CMP of Rs 305, Talwalkars is currently trading at a PE of 9.7x FY19E and EV/EBITDA of 5.0x FY19E. Given the Company's a) strong growth prospects given its leadership position in highly under penetrated and growing market b) 19% PAT CAGR over FY17-19E and c) average ROE of 15% through FY17-19E, we value the company at 12xFY19E EPS with a target price of Rs 378. We reiterate a BUY rating on the stock.