Cult.Fit's DRHP: Clean Governance Scan, First Profitable Year

What Cult.Fit's DRHP Actually Says

Cult.Fit Limited (formerly Curefit Healthcare) filed its Draft Red Herring Prospectus with SEBI on July 6, 2026, for an IPO comprising a fresh issue of up to Rs 950 crore and an offer for sale of up to 17,86,09,200 equity shares. We ran the Kill-Bill forensic protocol on the actual filing: full-document scan against a fixed list of red-flag disclosure terms (fraud, wilful default, SEBI/RBI action, related-party irregularities, auditor issues), verbatim quotes only, no inference.

The Governance Scan

Every keyword hit in the document was checked against its context, not just its presence. The result: no fraud finding, no SEBI or RBI enforcement action, no wilful default designation, no auditor resignation or adverse remark. The "related party," "contingent liabilities," "fraud," and "wilful default" hits in the document are table-of-contents references and standard SEBI ICDR glossary definitions, not disclosed events. On the specific criteria Kill-Bill checks for, this filing reads clean.

The two genuinely company-specific risk factors worth noting, both self-disclosed by the company: an acknowledged inability to fully "detect, deter or prevent all instances of misconduct" by employees, including misappropriation risk, and exposure to unauthorised or duplicate social media accounts operating under its brand. Both are standard operational risks for a consumer-facing chain at this scale, not governance red flags.

The Numbers That Matter

Revenue from operations grew 41.55% year-on-year to Rs 1,720.61 crore in FY26, up from Rs 1,215.54 crore in FY25 — both figures as restated in the DRHP's own financial statements, and the DRHP itself calls out that this is an acceleration from 31.17% growth the year before. Net loss narrowed from Rs 480.8 crore to Rs 251.9 crore, a 48% reduction. As of March 31, 2026, the company operated 708 fitness centres across 77 cities with 987,020 paid members.

Who's Selling, and How Much

The offer for sale is 17,86,09,200 equity shares across 36 selling shareholders — 22 institutional/corporate investors and 14 individuals. The DRHP doesn't fix a rupee value per seller yet (pricing happens later, at the RHP stage), so here's the exposure by share count and by current stake, largest first:

"Holding as of today" is each seller's pre-Offer stake as disclosed in the DRHP's shareholding-pattern table, on a fully diluted basis (959,931,103 total pre-Offer shares, including converted preference shares and vested ESOPs) — as of the DRHP filing date, not a live number that moves day to day.

Temasek's vehicle is the single largest seller by share count, ahead of Tata Digital, but the "of own stake being sold" column tells a different story: MacRitchie is trimming just 12.6% of its position, the smallest sell-down of anyone in the top group. Bruno Eduard Raschle, by contrast, is offering 98.3% of his entire holding — functionally a full exit — while IDG Ventures and Chiratae Trust are each selling roughly half their stakes. Mukesh Bansal, as founder, is selling 20% of his holding, in line with the more conservative end of the investor group. All of this sells at the same event — IPO listing — not staggered; shareholders excluded from the OFS remain locked in for six months post-listing under SEBI ICDR rules.

Start From ROCE and ROE, Not EBITDA

Adjusted EBITDA margin is the easiest line in a P&L to move — it's built entirely from what management chooses to add back. Before trusting a margin story, start from the two numbers that are hardest to dress up: return on capital employed and return on equity.

Cult.Fit doesn't disclose ROCE for itself (the term appears in the DRHP only in a qualitative competitor-comparison table). But Return on Net Worth — the DRHP's own equivalent of ROE, computed as loss for the year divided by net worth — is disclosed directly, and it's the right place to start:

†ROCE isn't disclosed for Cult.Fit itself, so we computed it: EBIT (loss for the year, plus tax, plus finance costs — including exceptional items, on a reported basis) divided by Capital Employed (Total Assets less Current Liabilities), both from the DRHP's Restated Consolidated Financial Information.

Both are deeply negative in every year shown, and both are improving. That's the honest starting point — not "the business found operating leverage," but "returns on capital and equity remain sharply negative, narrowing each year."

The Full Reconciliation, Not Just the Adjusted Number

Adjusted EBITDA margin is downstream of five separate add-backs to the reported loss. Here's the complete bridge, GAAP loss to the company's own Adjusted EBITDA, so the real margin at each stage is visible instead of just the final number:

The gap between the two bottom lines is smaller than it looks in FY26: plain EBITDA, with zero non-GAAP add-backs, is already positive at 6.0% margin — the FY26 turn isn't manufactured by the "Adjusted" label. But EBIT — after real depreciation on 708 physical fitness centres — is still negative at (7.2)% margin in FY26, same direction as ROCE and RoNW above. The improvement is real and it's been running for two years, not one; it just hasn't reached operating profit yet at the EBIT line, only at EBITDA.

Degree of Operating Leverage, correctly defined, is %-change in EBIT ÷ %-change in Revenue — not a margin trend. Using reported EBIT (the row above): DOL for FY25 is 1.69x (EBIT loss narrowed 52.6% against 31.2% revenue growth); DOL for FY26 is 1.60x (EBIT loss narrowed 66.4% against 41.6% revenue growth). Both years above 1.0x is a genuine signal — losses are shrinking faster than revenue is growing, which is what operating leverage looks like. The caveat: DOL computed off a negative EBIT base is inherently less stable than the textbook case of a profitable company, so read this as "the rate of loss-narrowing is outpacing growth two years running," not as a clean, mature-business leverage multiple.

What the Structure Tells You

FY26 is the first year plain EBITDA has turned positive, and it's also the year a meaningful slice of early capital — led by Temasek's MacRitchie vehicle — is positioned to exit. Neither fact is a red flag on its own. Together: fresh capital funding a business whose capital efficiency (ROCE, RoNW) is still solidly negative but improving on every measure for two straight years, alongside an exit window for investors who backed it before that improvement was visible.

One thing we can't check yet, because this is a draft prospectus and Cult.Fit hasn't listed: whether ROCE and RoNW keep climbing toward positive territory in the first full year after listing, or the improvement fades the way it has for some other new-age IPOs. That comparison only becomes possible once post-listing results are filed — it's on our list to revisit against Cult.Fit's first post-listing annual report.

Bottom Line

No governance red flags, on a clean-scan basis, as of this filing. Start from the metrics that matter most: ROCE at (7.0)% and RoNW at (37.6)% in FY26 — both deeply negative, both improving for two straight years running, both a long way from good. Plain EBITDA turned positive in FY26 without needing management's own add-backs to get there, and the rate of EBIT-loss-narrowing has outpaced revenue growth two years running (DOL > 1x) — a real signal, not a pre-IPO-year spike. But EBIT and ROCE are still negative, so "found operating leverage" overstates where the business actually is today. The OFS structure — Temasek as the largest seller by share count but the smallest seller of its own stake, Bruno Raschle exiting almost entirely — is the detail worth watching as this moves from draft to final RHP, and the post-listing ROCE/RoNW trajectory is the detail worth watching after.

---

Educational content only. AletheiaAI is not registered as an Investment Adviser under SEBI (Investment Advisers) Regulations, 2013 or as a Research Analyst under SEBI (Research Analysts) Regulations, 2014. Nothing here is investment advice, a recommendation, or a solicitation to buy or sell any security. All figures are drawn from Cult.Fit Limited's Draft Red Herring Prospectus filed with SEBI on July 6, 2026, and the underlying document should be independently verified before relying on it.