Cult.fit Sees Significant Growth Ahead of IPO

Cult.fit, a prominent fitness tech enterprise, reported a remarkable growth of over 31% in operating revenue year-on-year for the fiscal year concluding in March 2025. The company also managed to reduce its losses by 10%, amounting to Rs 481 crore during this period, as it prepares for an impending initial public offering.

For FY25, Cult.fit recorded an operating revenue of Rs 1,215.5 crore, a notable increase from Rs 926.6 crore in FY24, according to the consolidated financial statements submitted to the Registrar of Companies. Revenue from fitness subscriptions, which include key offerings like Cultpass, Cult.fit centres, and platform services, constituted 73% of the total revenue, escalating by 32.7% year-on-year to reach Rs 889 crore in FY25.

Additionally, the sales of products, ranging from sportswear for both men and women to various gym and fitness equipment, contributed Rs 326.4 crore to the overall revenue, with this segment witnessing a 27% growth compared to FY24. Cult.fit also saw earnings from other income sources, including interest from current investments and miscellaneous non-operating income, amounting to Rs 56.5 crore, bringing the total revenue to Rs 1,272 crore in FY25.

Expenses Overview for Cult.fit

When it comes to expenses, employee benefit costs remained largely unchanged at Rs 347.4 crore in the last fiscal year, which included Rs 99.5 crore in ESOP expenses. In contrast, Cult.fit’s material costs rose by 31% year-on-year, amounting to Rs 521.5 crore, making it the largest component of the company’s expenditures, representing nearly 30% of total costs.

Expenditure on advertising and promotions held steady at Rs 202.9 crore in FY25, while depreciation and amortisation costs increased by 12% year-on-year to Rs 237.6 crore. Legal and professional fees, alongside finance costs, contributed Rs 120.9 crore and Rs 109.5 crore, respectively, to the company’s total expenses. Information technology, travel, and various other miscellaneous costs caused overall expenses to climb by 12% year-on-year, now totalling Rs 1,751.6 crore in FY25.

Financial Performance Metrics

At the end of the fiscal year, the Bengaluru-based company reported a decline in losses by 10%, bringing it down to Rs 480.8 crore for FY25. The Return on Capital Employed (ROCE) and EBITDA margins were recorded at -24.02% and -15.54%, respectively, with the EBITDA loss amounting to Rs 189 crore during this period.

Cult.fit was able to improve its expense-to-earning ratio to Rs 1.44 in the previous fiscal year, while its current assets totalled Rs 1,029.5 crore, including a cash and bank balance of Rs 240.7 crore in FY25.

Investment Landscape and IPO Plans

According to a startup data intelligence platform, Cult.fit has secured over $675 million in funding from various investors, such as Accel, Temasek, Eternal (Zomato), Tata Digital, and others. Backed by Tata Digital, the company is reportedly aiming to raise Rs 2,500 crore via an initial public offering at an estimated valuation of around $2 billion, enlisting Axis Capital, Jefferies, Goldman Sachs, Morgan Stanley, and JM Financial as its underwriting partners.

Though it remains uncertain how the company will position itself for this ambitious IPO, it is evident that losses are likely to persist for several more quarters. An analysis of past IPOs, including those from profitable firms, suggests that 2026 may raise questions among investors about their initial perspectives. Currently, there seems to be little in the Cult.fit model that indicates high brand loyalty or the capacity to maintain a premium consistently, aside from its proficiency in fundraising and potential for inorganic growth.

With the existing margins, some may argue that the company merely buys growth, albeit not at particularly impressive rates. The firm’s performance bears resemblance to the direct-to-consumer surge observed in 2023, and it would be regrettable if it concluded in a similar manner. Launching a public offering may appear to be an unwise move at this moment, despite the current public interest in investing in opportunities they might not have considered two years ago.