Buy Talwalkars; target of Rs 340: Anand Rathi

Its dominance in the growing Indian fitness-and-wellness arena (a 20% share in the organised gym market) leads us to initiate coverage on Talwalkars Better Value Fitness, with a Buy and a target of Rs 340 (60% upside). A widening footprint and rising share of value-added services have driven a 31% CAGR in its revenue in the last five years, profit at a 44% CAGR, helped by operating leverage and better realisations. Introducing newer products and services and making a foray into the club business would not just aid its growth momentum but also  transform it into a complete-lifestyle operator.  

 

One of the best operating margins (>50%) in the consumer sector with strong growth assurance and growing free cash flows and return ratios make Talwalkars an attractive portfolio stock. At the CMP of Rs 212, the stock trades at 9.2x FY17e EPS of 23.1 and 7.3x FY18e EPS of 29.2.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.