The Indian startup ecosystem is witnessing a surge in IPO activity, and fitness unicorn Cult.fit is the latest to jump on board. Backed by Zomato and other marquee investors, the company has reportedly initiated plans for a public listing, eyeing a valuation of $2 billion. This marks a 28% increase from its last known valuation of $1.56 billion.
Credits: Inc 42
As per a CNBC-TV18 report, Cult.fit has shortlisted top-tier investment banks, including Axis Capital, Jefferies, Goldman Sachs, Morgan Stanley, and JM Financial, to lead its INR 2,500 crore ($292 million) public offering. If successful, Cult.fit will become the first Indian new-age tech fitness company to debut on the stock exchange.
The Journey from Curefit to Cult.fit
Cult.fit was first established in 2016 as Curefit by former Myntra cofounder Mukesh Bansal and former Flipkart CBO Ankit Nagori. After its gym chain became synonymous with the brand, Cult.fit changed its name. It now offers a comprehensive range of health and wellness services in addition to gyms.
Cult.fit’s portfolio includes:
- Gyms & fitness centers: A mix of owned and franchised outlets.
- Eat.fit: A health-focused cloud kitchen brand.
- Mind.fit: A mental wellness platform.
- Care.fit: A primary healthcare vertical.
Nagori exited the company in 2020 and went on to establish Curefoods, a cloud kitchen unicorn. Meanwhile, Cult.fit continued scaling its fitness centers, adopting a franchise model to expand its presence to 130 locations across India.
Financial Performance: Strong Revenue, Widening Losses
Although Cult.fit has seen strong sales growth, there are still concerns about its profitability. Its operating revenue increased from INR 693.7 crore in FY23 to INR 926.6 crore in FY24, a 33.6% increase. But compared to the previous fiscal year, its net loss increased by 42% to INR 888.5 crore from INR 625.5 crore.
For Cult.fit, this disparity between revenue growth and profitability is a major obstacle. Before going public, the company needs to concentrate on improving unit economics and cost optimization, even though its diverse business model offers several revenue sources.
Why is Cult.fit Going Public Now?
The timing of Cult.fit’s IPO aligns with the growing appetite for new-age tech startups among public market investors. Several startups, including Ather Energy, Ecom Express, ArisInfra, and BlueStone, have already filed their draft red herring prospectus (DRHP), while more than 20 startups are in various stages of IPO preparations.
For Cult.fit, an IPO represents an opportunity to:
- Raise fresh capital to fuel expansion and operational efficiency.
- Enhance brand credibility as a publicly listed company.
- Provide liquidity to early investors and employees with ESOPs.
Despite market optimism, Cult.fit must address its financial sustainability and justify its valuation before securing public investor confidence.
Challenges on the Road to IPO
Cult.fit’s IPO ambitions come with their fair share of challenges.
Profitability Woes: With widening losses, the startup must focus on cost-cutting, revenue optimization, and unit economics.
Franchise Expansion Risks: While the franchise model accelerates growth, it also requires consistent service quality and brand control.
Competitive Landscape: The Indian fitness industry is highly competitive, with players like Gold’s Gym, Anytime Fitness, and independent boutique fitness brands posing a threat.
Market Conditions: Although current market sentiment is favorable, any macroeconomic shifts could impact investor enthusiasm.
Credits: MoneyControl
The Road Ahead
The IPO of Cult.fit will mark a critical turning point for the fitness and wellness sector in India. The business could emerge as a major player in the industry if it can effectively handle the difficulties that lie ahead.
Cult.fit is well-positioned for a public market debut because to its growing footprint, several revenue streams, and solid investor support. However, how well it connects with investors will depend on its capacity to control losses and maintain profitability.
All eyes will be on the fitness unicorn as it gets ready to list, wondering if it can demonstrate its financial prowess or if its aspirations of going public are still unrealistic.
