Cult.fit Files ₹950 Cr IPO at Up to ₹4,000 Cr Valuation...

Synopsis:- Fitness and wellness company Cult.fit has filed its draft papers with the market regulator for an initial public offer comprising a fresh issue of up to Rs. 950 crore and a large offer for sale by existing investors, arriving at a moment when its losses have narrowed but not disappeared, and its overall valuation is pegged well below what private investors paid at its peak.

A prominent fitness and wellness chain has moved a step closer to going public, filing its draft red herring prospectus with the Securities and Exchange Board of India for an issue expected to value the company between Rs. 3,500 crore and Rs. 4,000 crore. The filing arrives as the company’s adjusted operating metrics have turned positive for the first time, even as its statutory losses persist and a large share of existing investors line up to sell.

Issue Structure and Lead Managers

The proposed IPO comprises a fresh issue of equity shares worth up to Rs. 950 crore and an offer for sale of up to 17.86 crore shares by existing investors. A pre-IPO placement of up to Rs. 190 crore may also be carried out, which would proportionately reduce the fresh issue size.

Kotak Mahindra Capital, Axis Capital, Goldman Sachs India, Jefferies India, JM Financial and Morgan Stanley India are the book-running lead managers, with MUFG Intime India acting as registrar.

Shares are proposed to be listed on both the BSE and the NSE. The filing has been made under Regulation 6(2) of SEBI’s ICDR Regulations, the route available to companies that do not meet the standard three-year profitability threshold, a detail that underlines how recently the company’s unit economics have improved.

Financial Performance

Revenue from operations grew 42 percent year-on-year to Rs. 1,720.6 crore in FY26. Adjusted EBITDA turned positive at Rs. 144.8 crore, against a loss of Rs. 33.5 crore a year earlier, with the adjusted EBITDA margin improving to 8.41 percent from negative 2.76 percent in FY25.

Net loss narrowed to Rs. 251.9 crore from Rs. 480.8 crore. For context, the company posted a net loss of Rs. 888.49 crore on revenue of just Rs. 926.66 crore in FY24, so the trajectory over three years has been one of steady improvement rather than a sudden turnaround.

Segment-wise, the services business contributed 69.6 percent of revenue and posted a profit of Rs. 210.1 crore, while the products segment, roughly 30 percent of revenue, remained loss-making at Rs. 57.4 crore, though that loss has narrowed from Rs. 79.9 crore in FY25. Management has set a target of PAT profitability by FY28.

Use of Proceeds

Of the fresh issue proceeds, Rs. 217.5 crore is earmarked for lease and rental payments on existing centres, Rs. 120 crore for repaying or prepaying borrowings, Rs. 75 crore for brand marketing, Rs. 276.6 crore for capital expenditure on new “Cult Elite” and “Cult Neo” centres, and Rs. 23.4 crore for its subsidiary Cultsport to open new exclusive brand outlets. The split shows a company still funding expansion and marketing even as it works toward profitability, rather than one using IPO proceeds purely to shore up its balance sheet.

Selling Shareholders and Their Returns

The offer for sale is dominated by early private investors booking exits, and the disclosed average acquisition costs reveal a wide spread of returns. Temasek-backed MacRitchie Investments, the largest seller at up to 2.47 crore shares, acquired its stake at an average cost of Rs. 59.85. Fitness First Luxembourg and co-founder Mukesh Bansal hold some of the lowest acquisition costs, at Rs. 12.84 and Rs. 14.51 respectively, implying substantially higher paper gains at IPO pricing.

Tata Digital’s average cost of Rs. 105.35 is the highest among disclosed sellers, suggesting a narrower margin of return depending on where the final issue price lands. Actor Hrithik Roshan, via his investment entity Extreme Brands, is also a selling shareholder, disposing of shares he initially acquired through a scheme of arrangement approved by the NCLT. Additional sellers comprise Doli Trading and Investments, an entity promoted by Asian Paints, Sun N Sand Hotels, and family trusts associated with Endiya Partners founder Sateesh Andra and ex-Myntra CEO Ananth Narayanan.

Key Risks for Retail Investors

Nearly 69 percent of the company’s network, 490 of 708 centres, operates through franchise partners or marketplace gyms rather than company-owned locations, a structure that limits control over service quality and cost but keeps capital intensity lower. The balance sheet carries Rs. 710.6 crore of goodwill that remains subject to impairment risk.

The DRHP also flags pending FEMA and Companies Act compliance issues and auditor observations regarding third-party point-of-sale software, both of which merit scrutiny once the final prospectus is available.

The proposed valuation band of Rs. 3,500 to 4,000 crore is also significantly lower than the company’s previous private valuation of approximately Rs. 12,600 crore after a Series G funding round earlier this year, a disparity that retail investors should consider when evaluating if the IPO price indicates a true adjustment in expectations or merely the realities of public market valuations for a business that continues to incur losses.

Business Overview

Cult.fit, formerly CureFit Healthcare and founded in 2016 by Mukesh Bansal and Ankit Nagori, operates 708 fitness centres and 29 exclusive brand outlets across 77 Indian cities, with 9.87 lakh paid members as of March 31, 2026. The company holds master franchise rights for Gold’s Gym across India, Nepal and Bangladesh, and has raised more than $714 million across 16 funding rounds since inception.

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