Shares of fitness chain Talwalkars Better Value Fitness Ltd listed at a premium on Monday as prospects of growth in India's huge and untapped fitness industry and strength in the broader market attracted investors.

Shares of the firm rose as much as 28 percent, or 163.4 rupees, from its issue price of 128 rupees on debut.

Talwalkars raised 774.4 million rupees via the intial public offering of 6.05 million shares, with the issue being covered 28 times.

"It's the first of its kind from the fitness industry in the listed space in India. With increasing health conciousness of people in India it is a stock to watch out for," said Arun Kejriwal, strategist at research firm KRIS.

Gyms in India are estimated to be part of a $113 million industry and expected to clock an healthy growth rate going forward, HDFC Securities said in a note.

For instance, only a meagre 0.4 percent of the Indian population have health club memberships compared to more than 16 percent in the U.S, the note said.

Talwalkars, which operates a diverse suite of services including gyms, spas, aerobics and health counseling, operates 51 health clubs in 24 cities and serves over 55,000 members.

Changing lifestyles and increased consumption in a rapidly growing economy has led to a greater need for a healthy lifestyle in India's cities.

The rising income levels in India with its growing young population also favour the consistent growth for the industry.

Despite this however, analysts warned the stock may come under pressure in the medium to long term if the firm fails to deliver on its growth plans as valuations are not cheap.

The P/E ratio is 54 times the annualized earnings per share for the nine months ended December 2009, and 85 times the earnings per share for FY09.

"Talwalkars operates in a hugely competitive market and there are new players entering this space with competitive prices everyday. This could take a toll on their margins," said an analyst with a Mumbai-based brokerage.

The firm plans to use the proceeds to repay debt and set up 27 health clubs in FY11.

At 11.05 a.m., shares of the firm were up 21.1 percent at 155 rupees on the BSE.

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