Chatha Foods — Q4 FY26 earnings call

Call held 26 Feb 2026

Management summary

Chatha Foods held a knowledge session outlining its ambitious growth plans, focusing on new vegetarian and Allana JV facilities. The company projects substantial revenue and margin expansion through FY29, driven by increased capacity utilization and a diversified product portfolio. Management emphasized strong R&D, robust quality control, and strategic expansion into HoReCa and export markets, while actively working to reduce customer concentration.

Highlights

  • Strong revenue growth trajectory with targets of ₹325+ Cr for FY27, ₹450+ Cr for FY28, and ₹550+ Cr for FY29.

  • Significant margin expansion expected, with gross margins for veg products at 30-32% and PAT margins reaching 9-10% by FY29.

  • Successful commissioning and ramp-up of new vegetarian and Allana JV facilities, diversifying product portfolio and reducing customer concentration.

  • Robust R&D capabilities enabling product customization and QSR-grade standardization for key clients like Domino's and Subway.

  • Strong vendor onboarding and food safety certification (BRC, FSSC) processes ensure no sourcing risks and high-quality raw materials.

Key financials

  1. Revenue ₹157 Cr
  2. EBITDA Margin 7%

What they filed

Q4 FY26: revenue up 30.2%, net profit up 33.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY24Q4 FY24Q2 FY25Q4 FY25Q2 FY26Q4 FY26
Revenue71 63 74 83 84 +18%82 +30%
EBITDA7 6 5 6 6 −14%7 +17%
Net profit3 3 3 3 3 +0%4 +33%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

medium confidence
  • Capex Capex disclosed
    • Setting up a new facility (non-veg similar to current volume) ₹50 Cr
    • Annual maintenance for plant and machinery ₹1.5 Cr
    Sheetal, if you want to set up a facility, as similar to our volume, it'll be around Rs.50 odd crores, Rs. 50+ crores.
  • M&A Allana Joint venture · Integrated

    Allana is JV 70% owned by our company, only 70% of the total sales would be consolidated. Vishal, I think so that is the right way of looking at it, right?

    Allana facility will add approx. 85-90 CR to revenue, with 32% gross margin.

    So just, you know, please continue this discussion. So, Kiran is asking that since Allana is JV 70% owned by our company, only 70% of the total sales would be consolidated.

Guidance & targets

Revenue

  • Total Revenue Revenue · FY27 · High confidence ₹325+ crores
    Okay, sure. So, the target is, so for the next year, the target is to do +325 CR kind of revenue with a gross margin of 30% at planned capacity utilization.

    — Vishal Sirmauria

  • Total Revenue Revenue · FY28 · High confidence ₹450+ crores
    And for the next financial i.e. the FY28, the target is of 450+ CR revenue.

    — Vishal Sirmauria

  • Total Revenue Revenue · FY29 · High confidence ₹550+ crores
    And for FY29, we will be at the peak capacity utilization and the revenue will be 550+ CR.

    — Vishal Sirmauria

Gross Margin

  • Gross Margin - Veg Products Gross Margin · Future · High confidence 30-32%
    So, on the margin side, on the veg products, the margin will be comparatively better as compared to the non-vegetarian products. So, for non-vegetarian products, we are operating with a gross margin of somewhere around 27-28%. Whereas for the veg products, basis the initial product costing and the market that we have assessed. We will be operating with a 30-32% kind of gross margin for the veg products.

    — Vishal Sirmauria

  • Gross Margin - Non-Veg Products Gross Margin · Future · High confidence 27-28%
    So, on the margin side, on the veg products, the margin will be comparatively better as compared to the non-vegetarian products. So, for non-vegetarian products, we are operating with a gross margin of somewhere around 27-28%.

    — Vishal Sirmauria

  • Gross Margin - Allana Facility Gross Margin · Future · High confidence 32%
    And for the Allana facility, it will be, again, 32% kind of gross margin. That is inbuilt in our SHA with Allana.

    — Vishal Sirmauria

  • Gross Margin - Combined Gross Margin · Future · High confidence 30%+
    And on the gross margin, so the target is basis the current market study, the pricing structure that we have reviewed. So, the margins will be plus 30% on a combined level.

    — Vishal Sirmauria

EBITDA Margin

  • EBITDA Margin at Full Capacity EBITDA Margin · Full capacity utilization · High confidence 15-16%
    So, it will be- So, yeah, roughly it will be close to 15 to 16%.

    — Vishal Sirmauria

PAT Margin

  • PAT Margin PAT Margin · Next financial year (FY27) · High confidence 5-6%
    And the PAT margins will be plus 5-6% for the next financial year, plus 7-8% for FY28 and plus 9-10% for FY29.

    — Vishal Sirmauria

  • PAT Margin PAT Margin · FY28 · High confidence 7-8%

    — Vishal Sirmauria

  • PAT Margin PAT Margin · FY29 · High confidence 9-10%

    — Vishal Sirmauria

Capacity Utilization

  • Chicken Facility Utilization Capacity Utilization · Next year · High confidence 80-85%

    From 75-80% today

    So, Sheetal, if you look at our chicken facility, we are operating at almost a 75% capacity utilization, 75 to 80% capacity utilization. And we think next year we should be increasing it by 5 to 10%.

    — Paramjit Singh Chatha

  • Vegetarian Facility Utilization Capacity Utilization · Coming year · High confidence 25-30%
    In the coming year, for the vegetarian facility, with our discussions going on with the customers again, which are based out of India, which some of them are new customers, some of them are regular customers without any export business, we hope to do 25 to 30% of capacity utilization.

    — Paramjit Singh Chatha

  • Allana Facility Utilization Capacity Utilization · Coming month · High confidence ~50%
    And for Allana, with the samples which have gone to various countries, the response we've got, in the coming month, we should be at what we call as a slightly larger sampling exercise. So, I think Alana, we should do around a 50% capacity utilization.

    — Paramjit Singh Chatha

  • Vegetarian Unit Utilization Capacity Utilization · Subsequent years · Medium confidence ~65%
    And in the subsequent years, we hope to do, for the veg unit, I think we'll do around 65%.

    — Paramjit Singh Chatha

  • Allana Facility Utilization Capacity Utilization · Subsequent years · Medium confidence ~80%
    Allana should come to almost 80% capacity utilization.

    — Paramjit Singh Chatha

  • All Three Plants Full Utilization Capacity Utilization · Third year from now · High confidence Full capacity
    And a third year from now, we will be at a full capacity utilization of all the three plants.

    — Paramjit Singh Chatha

Working Capital

  • Working Capital Cycle Working Capital · Future · High confidence within 55 days

    From 58 days today

    For Chatha Foods, we are planning to manage it. We are targeting to manage it within 55 days of cycle.

    — Vishal Sirmauria

  • Working Capital Cycle - Subsidiary Unit Working Capital · Future · High confidence 30-35 days
    And for the subsidiary unit, it will be less as compared to the CFL. As we will be billing to Allana only, so it will be somewhere around 30-35 days kind of cycle.

    — Vishal Sirmauria

What to watch in Q1 FY27

Vegetarian facility line trials and commissioning

Next quarter
Current Pilot kitchen trials ongoing
Target Line trial stage by third week of March 2026

Why it matters

Successful commissioning is crucial for realizing projected revenue and margin growth from the new vegetarian segment.

So, you know, if we look at Allana, we are already under what we call as line trials. So the products which had been developed in the pilot kitchen are being tested on the machines now, or on the lines as we call them, wherein for the vegetarian facility, you know, around the third week of March, we should be at a line trial stage.

Risks & concerns

  • Customer concentration risk

    medium

    The company is actively working to reduce dependency on its two largest customers by expanding into new segments like HoReCa, exports, and onboarding new QSR chains.

    And we are also expanding into- we've launched a new range of what we call as value products which fit into the HoReCa segment as well. ... we are working towards reducing our dependency on our two large customers.

    Management acknowledged

  • Input cost volatility (e.g., chicken prices)

    low

    Management mitigates this through geographical diversification of suppliers (7-8 chicken slaughtering units across India) and annual pricing agreements with customers, overriding short-term fluctuations.

    So, our procurement is spread across almost, Vishal, if I'm not wrong, seven to eight chicken slaughtering units. So, we're not dependent on one or two suppliers. And pricing is done annually.

    Analyst acknowledged

  • QSR demand slowdown impacting volumes

    low

    While per-store demand might slightly decrease, overall demand is sustained by the increasing number of new QSR stores, preventing a major impact on the company.

    We've seen the QSR demand, the per store demand could be going down, but we've not seen our demand going down. Per store demand is down slightly but there are also stores which are growing, right so, as we look at the QSR's plans, you know, the plans of opening new stores every year so, I don't see a very major impact coming on to us with the overall universe of number of stores being increased by all the brands.

    Analyst downplayed

  • Delay in KFC project onboarding

    low

    The KFC project has been delayed due to the Divyani and Sapphire merger, but it is still on hold and not abandoned.

    And as far as The KFC project is concerned - it got a little delayed with the merger which happened. So that's still on, but it's on hold for the time being with the Divyani and the Sapphire merger happening.

    Analyst acknowledged

Q&A highlights

6 direct
Strategy for B2B vs B2C and new customer acquisition Direct
At the moment, the whole focus is going to remain on exports and the B2B customers. As of now, we are not saying that we are fully averse to the idea of going B2C in the longer run. But the initial couple of years, the focus is going to be completely on our B2B customers and the export market.

Clarifies the company's immediate strategic focus on B2B and exports, deferring significant B2C push for later, which impacts marketing spend and margin profiles.

Raw material sourcing, quality control, and price volatility for chicken Direct
So, our procurement is spread across almost, Vishal, if I'm not wrong, seven to eight chicken slaughtering units. So, we're not dependent on one or two suppliers. And pricing is done annually. So, bird flu, as of now, if you look at the trend, it is very region-based and very small now.

Addresses concerns about supply chain resilience, quality standards (FSSC 22,000 minimum), and mitigation strategies for raw material price volatility and health scares like bird flu.

Asked by Madhur Rathi

Impact of backward integration by major QSRs and status of KFC/PVR onboarding Partial
No. If you look at one of the giants going into their own processing, so this was a very mutually decided decision between us and them. We were taken into confidence and so, the volume which was promised to us two years ago, we are doing much better than that. And as far as The KFC project is concerned - it got a little delayed with the merger which happened. So that's still on, but it's on hold for the time being with the Divyani and the Sapphire merger happening.

Provides insight into competitive dynamics with QSRs and updates on key potential client onboarding, indicating delays but continued engagement.

Asked by Mr. Mridul

Customer concentration and QSR volume fluctuations Direct
We've seen the QSR demand, the per store demand could be going down, but we've not seen our demand going down. Per store demand is down slightly but there are also stores which are growing, right so, as we look at the QSR's plans, you know, the plans of opening new stores every year so, I don't see a very major impact coming on to us with the overall universe of number of stores being increased by all the brands.

Reassures investors about the impact of potential QSR slowdowns, highlighting the company's resilience through overall market growth and diversification efforts.

Automation level and impact on operating costs Direct
And for the vegetarian unit, Sheetal, other than you know a few artisan products, we will be doing these- the bread units and the, you know, the frozen to fry a snack line, they're all fully automated. So, there will be quite a substantial reduction in manpower usage in the veg unit as compared to a chicken unit. And same for Allana. Allana has also, you know, we have kept the manpower cost in mind and there has been a lot of automation done in the new facility as well.

Explains how new facilities are designed for higher automation, leading to reduced manpower costs and improved operational efficiency, contributing to margin expansion.

Margin structure variation with increasing customer volumes Direct
Yeah. So, Garima, As the volume increases, there is no major change in the margin structure with the customer. So, like we mentioned, we are already working towards decreasing our customer concentration risk. And the numbers will speak definitely in the coming years. So as we are trying to reduce that concentration and there won't be much impact due to the margin structure due to the volume increases.

Clarifies that while volumes increase, the margin structure with existing customers remains stable, and the focus is on reducing concentration risk rather than leveraging volume for better margins with specific clients.

Asked by Mr. Vaibhav Kapoor

Talent acquisition for massive expansion Direct
Yes, Sheetal. The majority of the hiring has been done. The senior teams for both the new plants are in place. We have hired a CHRO. We've hired a Chief Operating Officer. There's a lot of delegation of duties to the team. And yes, so the talent acquisition is being taken care of and it's still ongoing.

Addresses concerns about the company's ability to manage rapid expansion by ensuring adequate senior leadership and talent acquisition for new facilities and increased scale.

Asked by Ms. Kashish

2 min read 5 chapters

Detailed narrative

New Facilities and Capacity Expansion

Chatha Foods is significantly expanding its manufacturing footprint with new vegetarian and Allana JV facilities. The vegetarian facility is expected to reach 25-30% capacity utilization in the coming year, while the Allana JV facility aims for approximately 50% utilization. The existing chicken facility currently operates at 75-80% utilization, with plans to increase it by 5-10% next year. The company projects all three plants to achieve full capacity utilization by the third year from now, supporting a revenue target of ₹550+ crores by FY29.

Ambitious Revenue and Margin Outlook

The company has provided robust financial guidance, targeting ₹325+ crores in revenue for FY27, ₹450+ crores for FY28, and ₹550+ crores by FY29. This growth is expected to be accompanied by significant margin expansion. Gross margins for vegetarian products are projected at 30-32%, non-vegetarian at 27-28%, and the Allana JV at 32%. Overall, EBITDA margins are targeted at 15-16% at full capacity, with PAT margins expected to climb from 5-6% in FY27 to 9-10% by FY29, driven by economies of scale and improved product mix.

Product Portfolio and Market Strategy

Chatha Foods boasts a diverse portfolio of 194+ SKUs, including flatbreads, gravies, frozen snacks, and ready-to-eat meat products, serving major QSRs like Domino's and Subway. The company is expanding its vegetarian offerings to meet growing demand and entering the HoReCa segment, which is expected to become a significant volume base next year. The Allana JV is primarily focused on international markets, leveraging Allana's distribution network across 85 countries, with samples already sent to 8-10 countries.

Sourcing and Quality Control

Management emphasized a strong vendor onboarding system and adherence to high food safety standards, requiring all suppliers to be FSSC 22,000 certified. This ensures no sourcing risks and consistent quality across raw materials, including chicken, vegetables, and spices. The company diversifies its chicken procurement across 7-8 slaughtering units in different geographical locations to mitigate risks like bird flu and maintain stable pricing through annual agreements.

Customer Relationships and Distribution

While maintaining long-standing relationships with large QSRs (e.g., Subway for 23 years), Chatha Foods is actively working to reduce customer concentration by onboarding new QSRs, expanding into HoReCa, and focusing on exports. For large customers, logistics are managed by the clients themselves (ex-factory model). For smaller customers, the company utilizes a distribution center and distributor model, working with a logistics and warehouse company for PAN India reach, maintaining a working capital cycle target of within 55 days.

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

More Fast Moving Consumer Goods earnings calls