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    Chatha Foods Q4 FY25 earnings call

    544151
    Fast Moving Consumer Goods·4 Jul 2025
    Management Summary

    Chatha Foods reported strong FY25 revenue growth of 18% to INR157 crores, with PAT at INR6 crores. The company is strategically expanding with new vegetarian and JV facilities, targeting INR550 crores revenue by FY28. While gross margins were impacted by a shift to manpower-intensive products and higher receivables due to extended credit terms, management expects margin improvement and stabilization of receivables in FY26.

    Highlights

    5

    • Revenue for FY25 reached INR157 crores, marking an 18% YoY growth driven by product expansion and new customer acquisitions.

    • Net worth increased to INR82.54 crores from INR57.7 crores in the last financial year, post successful IPO listing and reserves build up.

    • New vegetarian facility (16,000 MT capacity) and Allana JV are expected to generate INR200-210 crores and INR180-190 crores respectively, contributing to a total projected revenue of INR550 crores by FY28.

    • Capacity utilization for the non-vegetarian facility increased to 80%.

    • Onboarded 6-7 million large-sized QSR brands in FY25, and supplying 60% of Domino's and 80% of Subway's total requirement.

    Concerns

    3

    • Gross margin for FY25 slightly lower at 27% due to increased share of manpower-intensive hand-cut and artisan products, leading to additional operating costs of INR60-70 lakhs.

    • Receivables doubled due to extended credit terms for key existing customers and higher credit terms for new QSR acquisitions.

    • Delay in the new vegetarian unit going live, now expected by September, due to rains and changes in building layouts.

    What Changed2

    vs Q4 FY25

    Guidance items14 → 16 (+2)Risks discussed4 → 3 (-1)

    Key financials

    Single quarter

    06 metrics
    1. 01Revenue₹157 Cr+18%YoY
    2. 02Gross Profit₹42.31 Cr
    3. 03Gross Margin27%
    4. 04PAT₹6 Cr
    5. 05PAT Margin4%

    Capital allocation

    3
    high confidence
    CategoryHeadline
    Capex

    Capex disclosed

    M&A

    Allana CF Foods Pvt Ltd

    joint venture · integrated

    Liquidity

    Cash ₹31 crores

    Proceeds from the share capital issue via preference issue invested in bank deposits.

    Guidance & targets

    16
    CategoryTargetPriority
    Revenue
    Revenue Growth
    20%
    		High
    Revenue
    Existing Non-Veg Facility Revenue
    INR180-185 crores
    		High
    Revenue
    Total Revenue
    INR550 crores
    		High
    Revenue
    New Vegetarian Facility Revenue
    INR200-210 crores
    		High
    Revenue
    Allana JV Revenue
    INR180-190 crores
    		High
    Profitability
    Operating Margins
    better than FY25
    		Medium
    Profitability
    Gross Margin
    27%
    		High
    Profitability
    EBITDA Margin
    7-8%
    		High
    Profitability
    New Veg Facility Breakeven Capacity Utilization
    45%
    		High
    Profitability
    JV Facility Breakeven Capacity Utilization
    35-45%
    		High
    Working Capital
    Receivables Days / Cash Conversion Cycle
    50-55 days
    		High
    Capacity
    New Veg Facility Capacity Utilization
    20-25%
    		High
    Capacity
    Allana JV Capacity Utilization
    15-20%
    		High
    Operations
    New Veg Facility Commercial Production Start
    October
    		High
    Operations
    Allana Unit Go Live
    November
    		High
    Sales Mix
    New Veg Facility Export Proportion
    60%
    		High

    What to watch in Q1 FY26

    5

    New Vegetarian Facility Go-Live and Commercial Production

    next quarter
    CurrentExpected September for go-live, October for commercial production
    TargetCommercial operations commenced

    Why it matters

    Verifies the timely commissioning of a key growth driver and new revenue stream.

    Yes, September we will complete, we will get into line trials in September, Manahar. And we should start shipping out orders by October, November, October, hopefully💬.

    Risks & concerns

    3
    RiskSeverity

    Margin pressure due to QSR demand slowdown

    QSR's low or declining demand in the last financial year made it difficult to maintain margin percentage on artisan products. — Management acknowledged

    medium

    Volatility in agri-commodity prices (vegetables)

    Vegetables are volatile, but do not contribute a very large part of raw material inputs; other inputs like oil and chicken are under annual contracts. — Management acknowledged

    low

    Delay in new vegetarian unit commissioning

    Slightly delayed due to rains and changes in building layouts, now expected to go live by September with commercial production by October. — Management acknowledged

    low

    Q&A highlights

    7

    “So this new 30% addition, the handmade or artisan products addition, it gave us close to INR46 crores of revenue in the last financial year as compared to INR10 crores in the last financial year. But this came with the challenge that these artisan products are the hand-cut products, which are manpower-intensive, labor-intensive, which led to higher operating costs. So we almost ended up spending additional odd INR60 lakhs, INR70 lakhs on the manpower cost.”

    Explains the specific operational challenges that led to margin compression in FY25 and outlines steps to mitigate them, providing a future margin target.

    asked by Madhur Rathi

    2 min read6 chapters

    Detailed Narrative

    01

    FY25 Performance Overview and Growth Drivers

    Chatha Foods reported a robust 18% year-on-year revenue growth, reaching INR157 crores for FY25, driven by product expansion and new customer acquisitions. Despite this, PAT stood at INR6 crores with a 4% margin. The company successfully onboarded 6-7 million large-sized QSR brands and increased non-vegetarian facility capacity utilization to 80%, with non-vegetarian products contributing 96% of total revenue.

    02

    Strategic Expansion into New Facilities and Allana JV

    The company is embarking on significant expansion with a new vegetarian facility and a joint venture with Allana. The new vegetarian facility, with 16,000 metric tons installed capacity, is projected to generate INR200-210 crores in revenue. The Allana JV is expected to contribute INR180-190 crores, targeting a combined total revenue of INR550 crores by FY28. The vegetarian unit is expected to go live by September, and the Allana unit by November, with commercial production for veg starting by October.

    03

    Margin Compression and Mitigation Strategies

    Gross margins for FY25 were slightly lower at 27% compared to previous levels, primarily due to a 30% shift in product mix towards manpower-intensive hand-cut and artisan products, which incurred an additional INR60-70 lakhs in operating costs. To address this, the company has invested in an imported cutting line to automate processes and reduce labor costs. Management anticipates improved margins in FY26, targeting a gross margin of 27% and an EBITDA margin of 7-8% going forward⏳.

    04

    Receivables Management and Customer Acquisition

    Receivables doubled in FY25, attributed to extending credit terms for key existing customers to 45 days and onboarding new QSR clients who operate on higher credit terms. This was a strategic move to support revenue generation and customer acquisition. The company is actively working to stabilize its cash conversion cycle to 50-55 days in FY26, acknowledging the industry's current challenges and the need for vendor support.

    05

    Product Development and Market Strategy

    Chatha Foods continues to innovate, launching clean label, oven-baked fried, and food service-specific products, expanding its SKU count to 194 and serving 316 QSR outlets across 40 cities. The company is actively developing new products like sweet empanadas and handmade samosas, with some already being adopted by large QSR chains. For vegetarian exports, target markets include the US, Australia, and England, focusing on food service distributors and private label production rather than own brands.

    06

    KFC Partnership and Operational Efficiencies

    The company has initiated a strategic trial with KFC for a marination model, where Chatha Foods will marinate chicken for KFC. This 3-month trial, starting in August, is a new concept for KFC in India and does not require immediate capacity expansion for Chatha Foods. This partnership highlights the company's ability to offer specialized services to major QSRs, potentially unlocking significant future revenue without substantial upfront capital expenditure.

    This is an AI-generated summary of a publicly available earnings call transcript.