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Cult.Fit aims to become fit for IPO in 12 18 months

Cult.Fit aims to become fit for IPO in 12-18 months

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By Shruti Malhotra   | Akhil V  Oct 19, 2022 9:36:59 PM IST (Updated)

Cult.Fit's plan to start its run towards public markets comes as the fitness industry recovers, with gyms and offline fitness centres returning to near-normalcy following the pandemic-led disruption.

Tata Digital-backed Cult.Fit is working out to become fit for an initial public offering (IPO) in 12 to 18 months, with an aim to hit operational profitability at the company-level by mid-2023, a senior executive told CNBC-TV18.

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Cult.Fit's plan to start its run towards public markets comes as the fitness industry recovers, with gyms and offline fitness centres returning to near-normalcy following the pandemic-led disruption.
In the 2020-21 fiscal, the company suffered a 3x drop in revenue to Rs 160 crore over the previous fiscal, while losses mounted to Rs 670 crore, with layoffs, pay-cuts, gym shutdowns and operations rollback in small-town India.
However, given the recovery since April this year, Cult.Fit is confident that it could end the current fiscal on a positive note. "Overall revenue has increased 50 percent compared to pre-pandemic levels," said Naresh Krishnaswamy, Business Head, Cult.Fit.
"At Cure.Fit level, we will be EBIDTA positive by mid-next year," he added. EBIDTA is earnings before interest, depreciation, taxes and amortisation.
Among Cure.Fit's three verticals, two have turned operationally profitable. That's Cult.Fit fitness and direct-to-consumer (D2C) businesses. The third being the wellness vertical, which includes Mind.Fit and other offerings that are now put on the backburner, as the company focuses on businesses "that have the highest demand right now, and are providing the path to profitability".
Flexing The Cult.Fit Fitness Arm
From 250 centres pre-pandemic, the Zomato-backed venture has expanded to 600 centres across 40 cities, as demand for traditional physical gyms, online fitness classes, group fitness classes and sports sessions is on the rise, especially in small-town India.
The company's pivot during the pandemic to go asset-light with a franchise model is "working out really well". As it stands, 400 out of the 600 centres are operated by franchisees.
"In the next 2-3 years, we want to hit 1,000+ centres majorly driven by franchise and 3P networks," said Krishnaswamy, highlighting that the fitness business — online and offline — contribute 2/3rd of the overall revenue, while the rest comes from the D2C business.
Cult.Fit's current network of fitness centres includes the Gold's Gym outlets in India, for which it became the master franchise in India by acquiring the majority stake in F2 Fun & Fitness earlier this year.
Flexing The Other Arm
Cult.Fit also runs its own e-commerce marketplace, with offerings including apparels and accessories like treadmills, spin bikes, sportswear and more.
"All of our sales happens through our cult.fit app and offline at centre sales," said Krishnaswamy.
To boost offerings on the D2C e-commerce platform, Cult.Fit has acquired at-home cardio equipment brands such as RPM fitness, Fitkit, and Onefitplus. Overall, the company has made at least 14 acquisitions, including premium bicycle maker Urban Terrain.
"We’re always looking for opportunities for acquisitions. Currently, we are focusing on fundamentals of the business," said Krishnaswamy.
"This business has been operationally profitable in the last one year and has immense potential as it is a very large market and a billion-dollar category business," he added.
Founded in 2016 by Myntra co-founder Mukesh Bansal and Ankit Nagori, Cure.Fit last year also acquired Fitso from Zomato, along with securing a $50 million fund infusion from the now-listed foodtech giant in exchange for a 6.4 percent stake.
Prior to that, the fitness company received the backing of Tata Digital, with Bansal joining as the President of the Tata Group's newest venture. Ankit Nagori has since left, now running his own cloud-kitchen house of brands under CureFoods.
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