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Cult.Fit IPO: India's gym leader bets on franchise model and products

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Cult.Fit IPO: India's gym leader bets on franchise model and products

2026-07-28 04:45 UTCBy AlphaScala Research DeskSource reporting: livemint.comEditorial standards

Cult.Fit IPO: India's gym leader bets on franchise model and products

Cult.Fit filed for a ₹12,600 crore IPO. The fitness chain's top four cities generate over 90% of centre revenue, pushing a shift to asset-light franchises and product sales.

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Cult.Fit filed its draft red herring prospectus earlier this month, setting the stage for a public listing that will test investor appetite for new-age consumer businesses. The company, last valued at about ₹12,600 crore, reported ₹1,800 crore in operating revenue for fiscal 2026, according to the prospectus cited in a Mint report. That valuation works out to roughly 7.2 times trailing revenue.

Mukesh Bansal, co-founder of Myntra, and Ankit Nagori started Cult.Fit in 2016 as Cure.fit Healthcare, a full health ecosystem. The food business, EatFit, was spun off in 2020. Nagori left Cult.Fit within a year to focus on EatFit. Bansal stepped back from daily operations in early 2023 but remains executive chairman and a shareholder. Current management has sharpened the focus on balancing growth with profitability. The services business has been operationally profitable for two years. The products segment, which generated 30% of operating revenue in FY26, has steadily narrowed its losses. Cult.Fit has raised about $714 million from investors including Temasek, Tata Digital and Accel.

Cult.Fit runs 708 fitness centres and serves about 987,000 members. Centre revenues grew at a 33% compounded annual rate over the past two years. The revenue mix reveals a narrow addressable market. The top four cities – Delhi NCR, Mumbai Metropolitan Region, Bengaluru and Hyderabad – contributed more than 90% of fitness centre revenues in 2025-26. Their share has risen over the past two years, while smaller cities' share has declined. The prospectus shows that discretionary spending on premium, recurring fitness subscriptions remains concentrated in affluent urban and corporate hubs. Apartment complexes in those cities are increasingly adding gyms, intensifying competition.

Cult.Fit is shifting toward an asset-light model. Rather than owning gyms, it is expanding through franchises and marketplace gyms. In 2025-26, these two formats accounted for 69% of centres but generated only 47% of revenues. The gap reflects the financial mechanics of asset-light scaling. Third-party gym owners absorb the heavy capital expenditure on leases, fit-outs and equipment. Cult.Fit books platform commissions, listing fees or revenue splits instead of gross subscription revenues captured at company-owned locations. The model delivers capital efficiency and faster expansion, though at lower average revenue per centre. The prospectus says a majority of new centre additions will be franchise-led. Memberships range from ₹9,000 to ₹88,000 per year depending on the plan. The franchise push helped the membership base grow from about 700,000 in March 2024 to roughly 1 million in March 2026.

Annual member retention improved from about 41% in 2023-24 to 51% in 2025-26, according to the prospectus. Still, only about half of members stay beyond a year, forcing the company to spend heavily on customer acquisition. Marketing, branding and related expenses accounted for 8.4% of total expenditure in 2025-26. In mature fitness markets globally, average annual retention typically ranges between 65% and 70%. The gap reflects price sensitivity, seasonal drop-offs and evolving exercise habits common in emerging markets. The 10-percentage-point improvement over two years suggests Cult.Fit's tech ecosystem is gradually reducing churn as the subscriber base matures, the prospectus said.

Cult.Fit's growth strategy rests on two pillars. The first is expanding the market itself by bringing more Indians into organized fitness. The prospectus points to China, where per capita GDP increased 1.7 times between 2015 and 2025 while fitness centre membership penetration rose about fivefold to 5.5%. The comparison underscores how underpenetrated the Indian market remains. In 2025, India had just nine fitness centre subscriptions per 1,000 people, compared with 50 in China and 75 in Brazil. The second growth pillar is products – activewear apparel, fitness equipment, accessories and footwear. In 2025-26, this segment accounted for 30% of the company's revenues and grew faster than the services business, 60% versus 35%. Cult.Fit sells through its app, online platforms and 29 exclusive branded outlets across four cities.

Unlike in fitness services, where it holds a clear leadership position, Cult.Fit faces intense competition in products from established players such as Decathlon. As the company scales, the profitability of both businesses – not just their growth – will determine long-term success, the prospectus said.