The credit rating of Ilon, LLC (hereinafter, Ilon or the Company) is based on the high assessment of the operational risk profile, medium assessment of market position, medium business size, very high profitability, medium assessments of leverage and interest coverage, and strong liquidity. The rating is constrained by the very weak free cash flow (FCF) due to the high volume of the investment program. In the future, ACRA expects the Company’s market position to strengthen amid growth of the size of business. Taking this into account, the credit rating outlook has been changed from Stable to Positive.
Ilon is a fast-growing company that has been offering fitness services and developing its own chain of fitness clubs branded as DDX Fitness since 2018. As of October 2025, the DDX Fitness chain included 116 clubs located in different Russian regions, including 64 in Moscow and the Moscow Region; 31 clubs are at pre-launch stage. DDX Fitness had 600,000 clients as of 2025.
KEY ASSESSMENT FACTORS
The operational risk profile is strong in view of high scores for the Company’s business profile and geography of presence, and medium market position and corporate governance. Ilon is a leader in the fragmented Russian market of fitness services: according to FitnessData, the Company’s market share exceeds 5.9% as of 2025, and its share in the key and most capacious market of Moscow and the Moscow Region is more than 10%. At the same time, Ilon is the absolute leader in the luxury low-cost segment. ACRA notes that the fitness services market in Russia demonstrates a long-term trend of increasing demand due to the relatively low level of penetration of fitness services in comparison to developed countries, as well as the popularization of healthy lifestyles, while the industry is characterized by heightened cyclicality.
The DDX Fitness chain is characterized by smart design and high quality of club equipment, which, along with an affordable pricing policy, allows the Company to achieve high efficiency of floor space utilization. In the Agency’s opinion, DDX Fitness is currently a strong recognizable brand, and the Company’s promotional policy that benefits from diversified sales channels is highly efficient, which is reflected in the short time it takes for new clubs to reach the designed capacity. An additional advantage of the DDX Fitness chain in terms of attracting clients is the unique recurring subscription model for Russia where client accounts are debited automatically each month, which reduces the price threshold for new members.
The Company’s corporate governance assessment includes high scores for management structure and group structure. ACRA also assesses the Company’s business strategy as high, which has enabled it to maintain high growth rates and increase its market share. Financial transparency is medium, as the Company’s financial statements are not publicly available.
Medium size and very high profitability. FFO before net interest payments and taxes was RUB 4.6 bln in 2024 (+86% vs. 2023), and ACRA expects this indicator to exceed RUB 7 bln in 2025. The Agency expects growth rates of FFO before net interest payments and taxes to remain high in the medium term. According to ACRA’s calculations, the weighted average FFO before net interest payments and taxes from 2023 to 2028 will be RUB 11.1 bln, or 0.5 bps of Russia’s GDP, which corresponds to a medium size score according to ACRA’s methodology. At the same time, the weighted average FFO margin before net interest payments and taxes for the same period will be 50%, which corresponds to a very high assessment of profitability.
Medium leverage and interest payment coverage. Since lease accounts for a significant share in the Company’s costs, when analyzing leverage, the Agency proceeded from indicators calculated both with and without capitalized lease debt. According to ACRA’s calculations, the weighted average ratio of total debt to FFO before net interest payments from 2023 to 2028 is 2.5x, the ratio of capitalized lease-adjusted total debt to FFO before fixed payments is 3.3x, which corresponds to medium leverage as per the Agency’s methodology. The weighted average ratio of FFO before net interest payments (after lease payments) to net interest payments for the specified period is estimated by the Agency at 3.3x, while the ratio of FFO before fixed payments to fixed payments is 2.6x, which is assessed as a medium level of coverage of interest and fixed payments.
High liquidity assessment and very weak FCF. Given the long-term nature of debt obligations and the comfortable repayment schedule, Ilon has significant external and internal sources of liquidity. The very weak score for FCF is due to significant capital expenditures associated with the rapid expansion of the Company’s business.
KEY ASSUMPTIONS
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Capital expenditures and implementation of the program for opening new clubs in 2025–2028 in line with the Company’s plans;
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Sales growing in line with the Company’s projections for 2025–2028;
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Payment of dividends of no more than 20% of net IFRS profits;
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The Company retaining access to external liquidity sources.
POTENTIAL OUTLOOK OR RATING CHANGE FACTORS
The Positive outlook assumes that the rating will highly likely be upgraded within the 12 to 18-month horizon.
A positive rating action may be prompted by:
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FCF margin sustainably entering the positive area;
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Weighted average ratio of total debt (excluding lease) to FFO before net interest payments falling below 2.0x and weighted average ratio of FFO before net interest payments after lease payments to net interest payments (excluding lease) exceeding 5.0x;
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Weighted average ratio of adjusted total debt to FFO before fixed payments falling below 2.0x and the ratio of FFO before fixed payments to fixed payments exceeding 2.5x;
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The Company securing a clear leadership position in the fitness services market.
A negative rating action may be prompted by:
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Weighted average ratio of total debt (excluding lease) to FFO before net interest payments exceeding 3.5x and weighted average ratio of FFO before net interest payments after lease payments to net interest payments falling below 2.5x;
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Weighted average ratio of adjusted total debt to FFO before net interest payments exceeding 4.0x and the ratio of FFO before fixed payments to fixed payments falling below 1.5x.
RATING COMPONENTS
Standalone creditworthiness assessment (SCA): bbb+.
Support: none.
ISSUE RATINGS
There are no outstanding issues.
REGULATORY DISCLOSURE
The credit rating has been assigned to ILON, LLC based on the following methodologies: the Methodology for Assigning Credit Ratings to Non-Financial Corporations under the National Scale for the Russian Federation to calculate the SCA and determine the credit rating and the credit rating outlook of ILON, LLC under the national scale for the Russian Federation and the Key Concepts Used by the Analytical Credit Rating Agency within the Scope of Its Rating Activities to ensure consistent and uniform application of ACRA’s methodologies, models, and key rating assumptions.
The credit rating of ILON, LLC assigned under the national scale for the Russian Federation was published by ACRA for the first time on October 16, 2024. The credit rating and its outlook are expected to be revised within one year.
The credit rating was assigned based on data provided by Ilon, LLC, information from publicly available sources, and ACRA’s own databases. The rating analysis was performed using the IFRS accounting (financial) statements of ILON, LLC as of December 31, 2024. The credit rating is solicited and ILON, LLC participated in its assignment.
In assigning the credit rating, ACRA used only information, the quality and reliability of which were, in ACRA’s opinion, appropriate and sufficient to apply the methodologies.
ACRA provided no additional services to ILON, LLC during the year preceding the rating action.
No conflicts of interest were discovered in the course of credit rating assignment.
