Chatha Foods Limited (CFL), established in 1997, is a prominent frozen food processor known for serving top Quick Service Restaurants (QSRs), Casual Dining Restaurants (CDRs), and other entities within the Hotel-Restaurant-Catering (HoReCa) segment. The company's reputable brand, "Chatha Foods," is widespread, distributed through a robust network of 29 distributors, covering 32 cities across India.
This network successfully meets the demands of 126 mid-segment and standalone small QSR brands. CFL's manufacturing prowess is showcased in its Mohali district facility, boasting an annual production capacity of approximately 7,839 metric tons across all its frozen food products, achieved over two shifts.
Chatha Foods Limited's business model is multifaceted, emphasising
(a) Concept Manufacturing, where CFL retains ownership of product formulas, offering customers comprehensive turnkey solutions. This approach is bolstered by extensive research, testing, and a skilled team that conceptualises products with a unique brand identity.
(b) Concept Sharing Manufacturing, a collaborative effort where customers share their product formulas and ideas, working closely with CFL to develop brand-specific products.
(c) Own Brands, where CFL's products are sold under its brand through a wide distribution network targeting mid-segment and standalone QSR brands.
The company's diversified product portfolio spans across three main categories:
- Non-Vegetarian: Including pizza toppings, sandwich fillings, burger patties, snacks, and more, supplied to leading QSRs, CDRs, and other HoReCa segment players.
- Vegetarian: Launched in 2022, this range includes pizza toppings, sandwich fillings, burger patties, and taco fillings for the same target market.
- Plant-Based: Since 2021, CFL has expanded into plant-based products like sausages, salami, pepperoni, Indian snacks (kebabs, tikkas, samosas), nuggets, and burger patties. These are offered not only to QSRs, CDRs, and HoReCa players but also under other prominent brand names like Bluetribe (Alkem Group), Shaka Harry (Liberate Foods), Green Bird (Continental Coffee), and Plantaway (Graviss Group).
Industry Outlook
- India's Quick Service Restaurant (QSR) market, valued at ₹171.90 billion in FY 2022, is forecasted to grow to ₹431.27 billion by FY 2027, with a CAGR of ~20.47%.
- Consumer spending in tier II and III cities on QSR dining is expected to increase by 150%, reaching ₹3,750 per household over the next three years.
Chatha Foods Limited IPO Details
Chatha Foods Limited IPO Date
The IPO of Chatha Foods Limited is open for subscription from March 19, 2024, to March 21, 2024.
Chatha Foods Limited IPO's Price Band
Chatha Foods Limiteds IPO is a fresh issue IPO of up to ₹34.00 crore. It is a book-building issue. The price range is set to ₹53 to ₹56 per share.
Chatha Foods Limited IPOs Lot Size
The lot size for Chatha Foods Limiteds IPO is 2,000 shares with a minimum investment of ₹1,12,000.
Chatha Foods Limited IPOs Objectives
The company plans to allocate the net proceeds from the issuance to the following purposes:
- Chatha Foods Ltd intends to use ₹2,411.03 lakhs from the IPO proceeds to setup a new manufacturing facility at Mohali (Punjab).
- General Corporate Purposes
Peer Details
As per RHP, Tasty Bite Eatables Limited is the only listed peer whose business portfolio is comparable to the Chatha Foods.
How To Check the Allotment Status of Chatha Foods Limiteds IPO?
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Contact Details of Chatha Foods Limited
Registered office: 272, Mota Singh Nagar, Jalandhar – 144 001, Punjab, India
Contact Person: Priyanka Oberoi(Company Secretary and Compliance Officer)
Phone: + 91 18146 16381
E-mail: cs@cfpl.net.in
Chatha Foods Financial Performance
| Particulars | For the period Ended on September 30, 2023 | Year ending on March 31, 2023 | Year ending on March 31, 2022 |
|---|---|---|---|
| Total Income (in ₹ lakh) | 7,078.03 | 11,724.23 | 8,740.31 |
| EBITDA Margin (%) | 9.32% | 6.05% | 5.10% |
| Profit After Tax (PAT) (in ₹ lakh) | 341.04 | 245.2 | 67.24 |
| Current Ratio (x) | 0.98 | 0.83 | 0.67 |
| Debt to Equity Ratio(x) | 0.39 | 0.49 | 0.57 |
| Return on Equity (%) | 14.81% | 13.43% | 6.11% |
| Return on Capital Employed (RoCE) (%) | 14.54% | 11.95% | 3.55% |
| Earning Per Share (EPS)-in absolute ₹ | 2.06 | 1.48 | 0.41 |
Know before investing
Strengths
4CFL has strong ties with QSRs and CDRs, leading to repeat orders and a competitive edge, with relationships spanning 3 to 20 years, ensuring high customer retention.
Developed over the years, CFL's supply chain ensures timely delivery, setting a high barrier for new entrants and maintaining its clients' brand reputation.
Following GFSI-certified BRC standards, CFL's long-standing relationships with global suppliers (3-20 years) enable control over quality, pricing, and delivery.
Risks
4Chatha Foods Limited risks delays or cost overruns in commissioning its Proposed Manufacturing Facility in Mohali, Punjab, due to pending orders and government approvals, potentially impacting business operations and financial health.
The acquisition of land for the new facility hinges on specific terms and conditions. Non-compliance could negatively affect the company's business and financial status.
A significant revenue portion, amounting to 89.43% to 100% between FY 2021-2023, comes from the non-vegetarian segment. Any loss in this segment could severely impact financial results and cash flow.
The company's reliance on personal guarantees and properties from its Promoter for loans poses a risk. Revocation of these guarantees could jeopardise business operations and financial conditions.
