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TALWALKARS
UNRATED (RS224, MCAP: RS5.4BN / US$119MN)
• Talwalkars, a joint venture between the Talwalkars and Gawande families, is a prominent fitness and wellness player
in India. It was listed in May 2010, the first to do so in the space. Talwalkars started with five health clubs in 2003 and
now operates around 79 health clubs in India, with a total floor space of ~0.45m sqft as of 31 December 2010.
Talwalkars has a market share of approximately 8-10% in the organized health club market in India.
• Better control ensures quality service: Talwalkars uses the hub & spoke model unlike the franchised model adopted
by Gold Gym, its closest competitor. This enables it to have better control over its health clubs. Currently, Talwalkars
has approximately 80% of the health clubs under its ownership. It also has an employee training academy with a floor
space of ~25,000 sqft in Thane, Maharashtra, which ensures standardization of service quality across health clubs.
• Penchant demand: With the spurt of lifestyle diseases and higher disposable income, health clubs have seen good
traction in memberships. Talwalkars’ average membership fee is ~10% lower than that of its closest competitors. It has
a healthy membership renewal rate of ~ 70%. In line with its strategy of focusing on the middle-income segment, the
company is planning to increase its penetration in Tier II and Tier III cities.
• Drivers of profitability: Personnel expenses at 25% of revenues form the main cost element. The lease rates at which
the space for health clubs are secured is an important driver of profitability. The company pays an average rent of
Rs33-35 psf.
• Service extension strategies: Apart from offering gym services, Talwalkars has also started offering yoga and aerobics
in their health clubs. It has also initiated spa services and currently has 14 spas in operation. This has transformed
Talwalkars into a fitness chain that offers the entire gamut of services.
• Expansion plans in place: Talwalkars plans to increase the number of health clubs to 140 by FY12 from 76 now. The
management is anticipating a capex of Rs750m every year for expansion. The company incurs a capex of
approximately Rs18.5m-20m per health club and requires around 750-800 members to break even. The normal
payback period for investment is around four years after taking into account interest costs.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
TALWALKARS
UNRATED (RS224, MCAP: RS5.4BN / US$119MN)
• Talwalkars, a joint venture between the Talwalkars and Gawande families, is a prominent fitness and wellness player
in India. It was listed in May 2010, the first to do so in the space. Talwalkars started with five health clubs in 2003 and
now operates around 79 health clubs in India, with a total floor space of ~0.45m sqft as of 31 December 2010.
Talwalkars has a market share of approximately 8-10% in the organized health club market in India.
• Better control ensures quality service: Talwalkars uses the hub & spoke model unlike the franchised model adopted
by Gold Gym, its closest competitor. This enables it to have better control over its health clubs. Currently, Talwalkars
has approximately 80% of the health clubs under its ownership. It also has an employee training academy with a floor
space of ~25,000 sqft in Thane, Maharashtra, which ensures standardization of service quality across health clubs.
• Penchant demand: With the spurt of lifestyle diseases and higher disposable income, health clubs have seen good
traction in memberships. Talwalkars’ average membership fee is ~10% lower than that of its closest competitors. It has
a healthy membership renewal rate of ~ 70%. In line with its strategy of focusing on the middle-income segment, the
company is planning to increase its penetration in Tier II and Tier III cities.
• Drivers of profitability: Personnel expenses at 25% of revenues form the main cost element. The lease rates at which
the space for health clubs are secured is an important driver of profitability. The company pays an average rent of
Rs33-35 psf.
• Service extension strategies: Apart from offering gym services, Talwalkars has also started offering yoga and aerobics
in their health clubs. It has also initiated spa services and currently has 14 spas in operation. This has transformed
Talwalkars into a fitness chain that offers the entire gamut of services.
• Expansion plans in place: Talwalkars plans to increase the number of health clubs to 140 by FY12 from 76 now. The
management is anticipating a capex of Rs750m every year for expansion. The company incurs a capex of
approximately Rs18.5m-20m per health club and requires around 750-800 members to break even. The normal
payback period for investment is around four years after taking into account interest costs.
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