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.