Mumbai: Tata Digital will offload about half of its stake in Cult.fit during the company’s upcoming initial public offering, marking the first time it will sell shares in a new-age company that it invested in under Tata Sons chairman N. Chandrasekaran's digital commerce push.

Tata Digital invested ₹360 crore in the company in August 2021. Tata’s digital arm did not make any subsequent investments in Cult.fit and also forfeited partially subscribed shares, raising questions on whether it had re-evaluated its investment in the gym and fitness-centre chain.

The Bengaluru-based company is looking to offer its shares at a valuation of around ₹15,000 crore on a fully diluted basis, as per a merchant banker involved with the IPO. This banker added that the size of the offer could vary depending on investor sentiment closer to the launch.

Tata Digital forfeited about 6.4 million compulsorily convertible preference shares (CCPS) in Cult.fit allotted in August 2021 by paying only ₹0.1 per share and not the remainder ₹283.9 per share. The shares were forfeited by the Cult.fit board.

“Due to non-payment of the unpaid amount due, 6,382,043 Series E2 CCPS allotted to Tata Digital Limited stood forfeited on March 29, 2022, and our Board took note of the forfeiture pursuant to a resolution passed on April 18, 2022,” Cult.fit noted in its DRHP.

‘Lack of confidence’

"The sell-down of close to 50% of its holdings, with a prior history of forfeiting a CCPS series, does imply a lack of confidence on Tata Digital's part in the future business of Cult.Fit," said Shriram Subramanian, managing director of proxy advisory firm InGovern. "Cult has been a loss-making company for the last few years, and it might have made Tata Digital rethink its early investment thesis. Tata Group is not like a traditional venture capital investor and may reconsider their capital allocation decisions at any point of time."

Cult.fit reported revenue of ₹1,721 crore in FY26 with a loss of ₹252 crore. The company’s revenue has doubled over the past two financial years while its losses have narrowed to less than a third.

Mukesh Bansal, executive chairperson and managing director of Cult.fit, was a president at Tata Digital in March 2022 when it decided not to invest further in the company.

Chandrasekaran recruited Bansal to help Tata Digital’s Tata Neu consumer app, given his experience in building Myntra and Cult.fit. However, Bansal stepped back from day-to-day operations of Tata Neu in 2023.

Tata Digital chief executive officer Sajith Sivanandan did not immediately respond to Mint’s email seeking comment. A Cult.fit spokesperson did not respond to Mint’s emailed queries.

Tata Digital purchased 11.9 million CCPS of Cult.Fit in 2021 at ₹304 each. Each of its preference shares will be converted into 2.89 equity shares ahead of the IPO, giving Tata Digital about 34.4 million shares of Cult.fit and implying an average acquisition cost of ₹105.35 per share. This accounts for the 2:1 bonus shares issued by Cult.fit last month.

The company will offload 15.9 million shares during the IPO, which is about 46% of its total shareholding, as per the DRHP. This will be the first partial exit by Tata Digital from its investments in new-age companies. Its other investments include quick-commerce platform BigBasket and online pharmacist 1mg.

Lower valuation

The Cult.fit stake-sale decision comes after Tata Sons marked down the valuation of Tata Digital in April. The Tata Group holding company infused just under ₹3,000 crore into Tata Digital at a valuation of $10.3 billion, which was 5.5% lower than the valuation at which the company last received capital in February 2025, Mint reported in June.

Tata Digital reported revenue of ₹32,188 crore with a loss of ₹4,610 crore during the year ended 31 March 2025, as per the annual report of parent Tata Sons. The Tata Group has invested ₹26,306 crore in Tata Digital till date. The company’s accumulated losses totalled ₹16,958 crore as of March 2025.

Besides Tata Digital, late Ratan Tata, the former Tata Sons chairperson, invested in Cult.Fit as an angel investor. Tata picked up a stake in the company in his personal capacity in October 2016 by investing ₹6.7 crore. The shareholding was transferred to Ratan Tata Endowment Fund and Ratan Tata Endowment Trust upon his passing, as per his will.

At the same time, the UC-RNT fund, which was a partnership between the University of California and Ratan Tata, also invested ₹13.3 crore in the company. The fund made subsequent investments in Cult.fit and holds a 2.06% stake in the company today.

Mumbai: Tata Digital will offload about half of its stake in Cult.fit during the company’s upcoming initial public offering, marking the first time it will sell shares in a new-age company that it invested in under Tata Sons chairman N. Chandrasekaran's digital commerce push.

Tata Digital invested ₹360 crore in the company in August 2021. Tata’s digital arm did not make any subsequent investments in Cult.fit and also forfeited partially subscribed shares, raising questions on whether it had re-evaluated its investment in the gym and fitness-centre chain.

The Bengaluru-based company is looking to offer its shares at a valuation of around ₹15,000 crore on a fully diluted basis, as per a merchant banker involved with the IPO. This banker added that the size of the offer could vary depending on investor sentiment closer to the launch.

Tata Digital forfeited about 6.4 million compulsorily convertible preference shares (CCPS) in Cult.fit allotted in August 2021 by paying only ₹0.1 per share and not the remainder ₹283.9 per share. The shares were forfeited by the Cult.fit board.

“Due to non-payment of the unpaid amount due, 6,382,043 Series E2 CCPS allotted to Tata Digital Limited stood forfeited on March 29, 2022, and our Board took note of the forfeiture pursuant to a resolution passed on April 18, 2022,” Cult.fit noted in its DRHP.

‘Lack of confidence’

"The sell-down of close to 50% of its holdings, with a prior history of forfeiting a CCPS series, does imply a lack of confidence on Tata Digital's part in the future business of Cult.Fit," said Shriram Subramanian, managing director of proxy advisory firm InGovern. "Cult has been a loss-making company for the last few years, and it might have made Tata Digital rethink its early investment thesis. Tata Group is not like a traditional venture capital investor and may reconsider their capital allocation decisions at any point of time."

Cult.fit reported revenue of ₹1,721 crore in FY26 with a loss of ₹252 crore. The company’s revenue has doubled over the past two financial years while its losses have narrowed to less than a third.

Mukesh Bansal, executive chairperson and managing director of Cult.fit, was a president at Tata Digital in March 2022 when it decided not to invest further in the company.

Chandrasekaran recruited Bansal to help Tata Digital’s Tata Neu consumer app, given his experience in building Myntra and Cult.fit. However, Bansal stepped back from day-to-day operations of Tata Neu in 2023.

Tata Digital chief executive officer Sajith Sivanandan did not immediately respond to Mint’s email seeking comment. A Cult.fit spokesperson did not respond to Mint’s emailed queries.

Tata Digital purchased 11.9 million CCPS of Cult.Fit in 2021 at ₹304 each. Each of its preference shares will be converted into 2.89 equity shares ahead of the IPO, giving Tata Digital about 34.4 million shares of Cult.fit and implying an average acquisition cost of ₹105.35 per share. This accounts for the 2:1 bonus shares issued by Cult.fit last month.

The company will offload 15.9 million shares during the IPO, which is about 46% of its total shareholding, as per the DRHP. This will be the first partial exit by Tata Digital from its investments in new-age companies. Its other investments include quick-commerce platform BigBasket and online pharmacist 1mg.

Lower valuation

The Cult.fit stake-sale decision comes after Tata Sons marked down the valuation of Tata Digital in April. The Tata Group holding company infused just under ₹3,000 crore into Tata Digital at a valuation of $10.3 billion, which was 5.5% lower than the valuation at which the company last received capital in February 2025, Mint reported in June.

Tata Digital reported revenue of ₹32,188 crore with a loss of ₹4,610 crore during the year ended 31 March 2025, as per the annual report of parent Tata Sons. The Tata Group has invested ₹26,306 crore in Tata Digital till date. The company’s accumulated losses totalled ₹16,958 crore as of March 2025.

Besides Tata Digital, late Ratan Tata, the former Tata Sons chairperson, invested in Cult.Fit as an angel investor. Tata picked up a stake in the company in his personal capacity in October 2016 by investing ₹6.7 crore. The shareholding was transferred to Ratan Tata Endowment Fund and Ratan Tata Endowment Trust upon his passing, as per his will.

At the same time, the UC-RNT fund, which was a partnership between the University of California and Ratan Tata, also invested ₹13.3 crore in the company. The fund made subsequent investments in Cult.fit and holds a 2.06% stake in the company today.