Cult.Fit files draft IPO papers to raise Rs 950 Cr via fresh issue

Fitness company Cult.Fit has filed the draft papers for an initial public offering (IPO) with the Securities and Exchange Board of India.

The company plans to raise Rs 950 crore through a fresh issue of shares. Meanwhile, several early investors and existing shareholders will partially exit through an offer for sale (OFS).

Cult.Fit is positioning itself as more than a gym operator. Over the past decade, the company has built an integrated fitness and wellness platform spanning gyms, digital fitness, sports equipment, apparel, and nutrition products.

According to the draft red herring prospectus (DRHP), the proceeds of the fresh issue will primarily be used to expand Cult.Fit's fitness centre network, meet lease obligations, repay borrowings, support marketing initiatives, and grow its Cultsport retail business.

Around Rs 276.6 crore has been earmarked for opening new centres, Rs 217.5 crore for lease related payments, Rs 120 crore for debt repayment, Rs 75 crore for marketing, and about Rs 23.4 crore for expanding Cultsport stores.

Unlike many recent IPOs where fresh capital formed the bulk of the issue, Cult.Fit’s public offer also includes a sizeable OFS of about 178.6 million shares. This allows several long-term investors to monetise part of their investments while leaving the company with fresh funds for expansion.

Among the largest selling shareholders are Temasek-backed MacRitchie Investments, Fitness First Luxembourg, IDG Ventures, founder Mukesh Bansal, Tata Digital, Chiratae Ventures, Bruno Raschle, Schroders Private Equity, and Accel.

The company does not have an identifiable promoter and is professionally managed, a structure that has become increasingly common among venture-backed technology and consumer businesses.

Profitability remains the key question

The company's financial performance suggests that Cult.Fit has entered a different phase of its journey. Revenue has grown rapidly while losses have narrowed substantially over the past three financial years.

Revenue from operations increased from Rs 926.7 crore in FY24 to Rs 1,215.5 crore in FY25 and further to Rs 1,720.6 crore in FY26. The latest financial year has recorded an annual growth of more than 41%.

The company’s net loss reduced from Rs 888.5 crore in FY24 to Rs 480.8 crore in FY25 and further to Rs 251.9 crore in FY26.

The improvement is equally visible at the operating level. Loss before tax narrowed from Rs 888.1 crore in FY24 to Rs 249.9 crore in FY26, indicating that the business is steadily moving towards break-even even though it has not yet achieved profitability.

The composition of revenue also provides insight into how the business is evolving.

Services remain the core business, generating Rs 1,197.8 crore in FY26, or nearly 70% of revenue. This includes fitness memberships and services offered through the company’s network of centres.

The products segment, which includes fitness equipment, apparel and accessories sold through company-owned stores, online channels, and marketplaces, generated Rs 522.8 crore and accounted for just over 30% of revenue. Notably, the products business grew faster than services during the year, suggesting that Cult.Fit is increasingly becoming a broader consumer fitness brand rather than only a gym chain.

The company’s balance sheet also highlights the economics of a large physical fitness network. Total assets stood at about Rs 3,103 crore as of March 2026, including significant right-of-use assets arising from leased fitness centres and goodwill from earlier acquisitions. Cash and cash equivalents increased to about Rs 235 crore from Rs 93 crore a year earlier, strengthening liquidity ahead of further expansion.

Challenges and opportunities

Cult.Fit notes that it occupies a leading position within India’s organised fitness ecosystem. According to the DRHP, it was the country’s largest fitness service provider as of March 2026, operating more than four times as many fitness centres as the second largest player. It also states that it generated 14 to 18 times the revenue of the second largest fitness services company during FY25 and held an estimated 4 to 6% share of India’s fragmented fitness services market.

The company also points to changing consumer behaviour. Nearly 46% of its paid users were first-time gym users when they joined the platform, while around one-third of its paid member base comprised women, indicating that organised fitness is expanding beyond the traditional customer profile.

Despite ample growth opportunities, the DRHP also highlights the risks involved in the investment bet.

The company continues to report losses despite strong revenue growth. Investors need to assess whether the current pace of improvement can eventually translate into sustainable profitability.

Another important consideration is the cost structure. Operating large numbers of leased fitness centres creates fixed financial commitments regardless of utilisation levels. If membership growth slows or discretionary consumer spending weakens, these lease obligations could weigh on profitability. The company is also dependent on continued investments in marketing, technology and centre expansion to sustain growth.

Competition is another challenge. India's fitness industry remains fragmented, with organised chains competing against local gyms, boutique studios, franchise operators, digital fitness platforms, and international brands. The DRHP notes that expansion into Tier II cities may involve longer customer acquisition cycles, greater price sensitivity, and slower payback periods. It also identifies maintaining consistent service quality across an expanding network as an operational challenge.

The company further highlights potential regulatory changes, compliance requirements, and rising competitive intensity as factors that could affect future performance.