The Sweat Thesis

Every January, urban India makes its pact with optimism. A credit card gets charged, an app gets downloaded, a membership bought to undo the holiday season. For years, the neighbourhood gym ran entirely on that first burst of enthusiasm. A proprietor in Koramangala or Bandra would sell 400 passes for a floor built to hold 50, turn down the air conditioning, and collect the surplus after the cards sat untouched by March. An empty room made money. A crowded floor made trouble.

In April 2010, one company tried to take that trade public. Talwalkars Better Value Fitness listed on the BSE and became India’s first publicly traded gym chain. The 78-year-old company was selling a familiar proposition: a thinly served fitness market, a rising middle class, room for chains to make money at scale. Its IPO was subscribed 28 times, and the company even made it to the Wall Street Journal. Then it stretched that thesis until it broke — 272 centres, bond defaults, liquidation, and multiple Enforcement Directorate raids over an alleged loan fraud involving its promoters.

Sixteen years later, Cult.fit Limited, India’s first fitness unicorn, filed its own draft red herring prospectus with Sebi carrying a strikingly similar pitch. Its commissioned report, produced by Redseer Strategy Consultants, says India’s fitness market remains underpenetrated: less than 1% of people hold gym memberships, against 25% in the United States and 5.5% in China. Talwalkars had put the figure at 0.4%. The gap is old. The pitch is newer.