Any current/future new fundraising through debt or equity?

The company is raising money through an initial public offering (IPO) as part of their growth and expansion plans. Funds from the IPO will primarily be used to set up a new vegetarian plant to diversify product offerings and customer base. No mention of any other current or future fundraising through debt. The focus is on organic growth with internal accruals and equity infusion from the IPO. No indication of specific plans to raise external debt at this time, though the possibility is not explicitly ruled out.

Any current/future capex/capital investment/strategic investment?

Chatha Foods is setting up a new vegetarian plant with an estimated capex of around INR 40 crores. Construction for the new plant is planned to start soon, with operations expected to begin by March 2025. The new plant will diversify product lines, including flatbreads, frozen-to-fry patties, ready-to-eat sauces, gravies, and shelf-stable rice. Expected peak capacity of the new unit is about 16,000 metric tons with potential revenue around INR 200-210 crores. The new plant aims for 10-12% EBITDA margin and focuses on both existing and export markets. For the existing chicken unit, no immediate

Future growth expectations in sales/revenue/volumes?

New vegetarian plant to drive 2-3x growth over next few years, aiming to diversify product lines (flatbreads, frozen to fry patties, ready-to-eat sauces and rice). Chicken business expected to grow about 20% over next 2 years, targeting INR175-200 crores revenue from existing unit by FY26. Combined target for company revenue in 3-4 years: INR300-400 crores with 10-12% EBITDA margin, potentially improving with economies of scale. Export markets will be a major growth area for vegetarian products; new sales hires planned for export market expansion. QSR customer base growth driven by add

Future growth expectations in earnings/operating earnings/profits/EPS?

The company aims to grow its business 2-3x over the next few years by setting up a new vegetarian plant focused on QSR needs and exports. The new vegetarian plant (INR40 crore capex) is expected to generate peak revenue of around INR200-210 crore with EBITDA margins targeted at 10-12%. The existing chicken business is expected to grow at about 20% CAGR, ramping up revenues from INR130-135 crore to INR175-200 crore over 2 years, with EBITDA margins in the 10-12% range. The company targets 10-12% EBITDA margins overall, with margin improvement potential from economies of scale, especially

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Chatha Foods LtdQ2 FY24Food Products

Chatha Foods Ltd Q2 FY24 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹85.5P/E: 34.4Market Cap: ₹207 CrSector: Food Products

Management growth scorecard

Revenue

Category 2

Margin

Category 2

Fundraise

Yes

Order

Yes

Capex

Yes

3 of 5 growth signals are positive.

Full analysis

Revenue guidance

Category 2

→New vegetarian plant to drive 2-3x growth over next few years, aiming to diversify product lines (flatbreads, frozen to fry patties, ready-to-eat sauces and rice).
→Chicken business expected to grow about 20% over next 2 years, targeting INR175-200 crores revenue from existing unit by FY26.
→Combined target for company revenue in 3-4 years: INR300-400 crores with 10-12% EBITDA margin, potentially improving with economies of scale.
→Export markets will be a major growth area for vegetarian products; new sales hires planned for export market expansion.
→QSR customer base growth driven by adding new clients and expanding share with existing ones; smaller QSR chains growing at pace with larger ones.
→Frozen to fry and ready-to-eat lines expected to ramp quicker; bread line may take longer.
→Existing chicken capacity utilization at ~65-66%; peak utilization could go up to 70-75%.

Margin guidance

Category 2

→The company aims to grow its business 2-3x over the next few years by setting up a new vegetarian plant focused on QSR needs and exports.
→The new vegetarian plant (INR40 crore capex) is expected to generate peak revenue of around INR200-210 crore with EBITDA margins targeted at 10-12%.
→The existing chicken business is expected to grow at about 20% CAGR, ramping up revenues from INR130-135 crore to INR175-200 crore over 2 years, with EBITDA margins in the 10-12% range.
→The company targets 10-12% EBITDA margins overall, with margin improvement potential from economies of scale, especially in bread/vegetarian products.
→Medium-term aspiration: Achieve INR300-400 crore in sales with 10-12% EBITDA margins in 3-4 years, driven by diversification and expansion in product lines and customers.
→Export market expansion will require hiring additional sales staff, indicating expected growth in international revenues.

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Fundraise plans

Yes

→The company is raising money through an initial public offering (IPO) as part of their growth and expansion plans.
→Funds from the IPO will primarily be used to set up a new vegetarian plant to diversify product offerings and customer base.
→No mention of any other current or future fundraising through debt.
→The focus is on organic growth with internal accruals and equity infusion from the IPO.
→No indication of specific plans to raise external debt at this time, though the possibility is not explicitly ruled out.

Order book

Yes

- The company has ongoing commitments for the ready-to-eat side with soft dialogues started with QSR customers in India, particularly for flatbreads. - For export of breads, they are still in the product development phase and searching for customers. - The frozen to fryer product line is already in trial stages, with existing dialogues with customers like Subway and Taco Bell. - There is a small partnership started with Zomato for small QSR businesses, indicating growing order opportunities there. - Existing large clients like Domino's and Subway provide a significant share of business; Domino's accounts for about 45% of revenue. - The company is adding new clients such as Blue Tokoi, Third Wave Coffee, Tim Hortons, and Wok Express. - They have not received volume plans from larger QSR clients but get updates on store openings and product launches regularly. Overall, orderbook is a mix of committed orders for ready-to-eat products and exploratory discussions for export and newer product lines.

Capex plans

Yes

→Chatha Foods is setting up a new vegetarian plant with an estimated capex of around INR 40 crores.
→Construction for the new plant is planned to start soon, with operations expected to begin by March 2025.
→The new plant will diversify product lines, including flatbreads, frozen-to-fry patties, ready-to-eat sauces, gravies, and shelf-stable rice.
→Expected peak capacity of the new unit is about 16,000 metric tons with potential revenue around INR 200-210 crores.
→The new plant aims for 10-12% EBITDA margin and focuses on both existing and export markets.
→For the existing chicken unit, no immediate plans for a new plant, but expansion is in thoughts.
→Existing chicken plant’s gross block is close to INR 59 crores; net asset around INR 30 crores.
→The company expects ramp-up of vegetarian plant sales in FY25 and FY26 with breakeven at approximately 45% utilization.

How does Chatha Foods Ltd rank vs peers in Food Products?

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