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CHATHA FOODS LIMITED — Q4 FY25 earnings call

Call held 4 Jul 2025

Company page: CHATHA FOODS share price, financials & guidance record

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

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

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.

Key financials

01 Revenue ₹157 Cr +18%YoY
02 Gross Profit ₹42.31 Cr
03 Gross Margin 27%
04 PAT ₹6 Cr
05 PAT Margin 4%
06 Net Worth ₹82.54 Cr

What they filed

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

₹ Cr · quarterly

Line item	Q2 FY24	Q4 FY24	Q2 FY25	Q4 FY25	Q2 FY26	Q4 FY26
Revenue	71	63	74	83	84 +18%	82 +30%
Expenses	64	57	68	77	78	75
EBITDA	7	6	5	6	6 −14%	7 +17%
Margin	9%	9%	7%	7%	7%	8%
Other income	0	0	1	0	0	0
Interest	0	0	0	1	0	1
Depreciation	1	1	1	1	2	1
Profit before tax	5	4	4	4	4 −20%	5 +25%
Tax rate	28%	27%	28%	26%	27%	24%
Net profit	3	3	3	3	3 +0%	4 +33%
EPS	2.06	1.23	1.44	1.18	1.32	1.45

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

high confidence

Capex Capex disclosed
- New vegetarian facility (16,000 metric ton installed capacity)
- Imported cutting line for chicken facility
But to address that, we have already invested in an imported cutting line in the past year.
M&A Allana CF Foods Pvt Ltd Joint venture · Integrated

Market products worldwide, samples being made, tested, customer feedbacks are positive.
Will have better margins than current company-wide margin.

For the Allana CF Foods Pvt Ltd, the JV company, that will be again close to INR180-INR190 crores kind of revenue.
Liquidity Cash ₹31 Cr Proceeds from the share capital issue via preference issue invested in bank deposits.

As of March 31st, 2025, INR31 crores has been utilized out of the IPO proceeds. As of 31st March, 2025, the proceeds from the share capital issue via preference issue is available with the company and has been invested in bank deposits.

Guidance & targets

Revenue

Revenue Growth Revenue · FY26 · High confidence 20%

We are aiming to maintain the same plus 20% revenue growth for the next financial year also.

— Vishal Singh Sirmauria
Existing Non-Veg Facility Revenue Revenue · FY26 · High confidence INR180-185 crores

For this chicken facility, the existing non-vegetarian facility, we are projecting a 20% increase for this current financial year. With this 20% increase, we will be roughly at INR180-INR185 crores. That is the max that we can do from this facility.

— Vishal Singh Sirmauria
Total Revenue Revenue · FY28 · High confidence INR550 crores

On total, we are looking at close to INR550 crores of revenue by FY28.

— Vishal Singh Sirmauria
New Vegetarian Facility Revenue Revenue · FY28 · High confidence INR200-210 crores

We will be having 16,000 metric ton installed capacity there and that will be able to generate close to INR200-INR210 crores revenue from the vegetarian facility.

— Vishal Singh Sirmauria
Allana JV Revenue Revenue · FY28 · High confidence INR180-190 crores

For the Allana CF Foods Pvt Ltd, the JV company, that will be again close to INR180-INR190 crores kind of revenue.

— Vishal Singh Sirmauria

Profitability

Operating Margins Profitability · next year · Medium confidence better than FY25

So the margins will be better than this. It won't be the same, we will improve on the margins. The industry will improve from next year. So margins would be better. And we are talking only of the chicken business. As we go to operate our vegetarian unit as well, so the overall company margins would be much better.

— Paramjit Singh Chatha
Gross Margin Profitability · going forward · High confidence 27%

So we will be trying to maintain this like I mentioned. So it is all the gross margins impact on the EBITDA side. But we will be maintaining this 7% to 8% kind of EBITDA going forward.

— Vishal Singh Sirmauria
EBITDA Margin Profitability · going forward · High confidence 7-8%

— Vishal Singh Sirmauria
New Veg Facility Breakeven Capacity Utilization Profitability · N/A · High confidence 45%

So for this veg facility, it will be close to 45% capacity utilization.

— Vishal Singh Sirmauria
JV Facility Breakeven Capacity Utilization Profitability · N/A · High confidence 35-45%

And for the JV facility, it will be close to 35% to 45% of the capacity utilization to be profitable to reach at the breakeven level.

— Vishal Singh Sirmauria

Working Capital

Receivables Days / Cash Conversion Cycle Working Capital · this year · High confidence 50-55 days

So on the receivables part, we are targeting somewhere around 50 days. And on the cash conversion cycle, we can consider 50, 55 days to be the new normal looking at the broadened customer base and the new customer acquisitions.

— Vishal Singh Sirmauria

Capacity

New Veg Facility Capacity Utilization Capacity · this year · High confidence 20-25%

Vishal, if I am not wrong, we are targeting around a 20%-25% capacity utilization this year?

— Paramjit Singh Chatha
Allana JV Capacity Utilization Capacity · Q4 · High confidence 15-20%

It would be for veg and Manahar, for the JV we are targeting somewhere around 15%-20% for the Q4.

— Vishal Singh Sirmauria

Operations

New Veg Facility Commercial Production Start Operations · FY26 · High confidence October

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.

— Paramjit Singh Chatha
Allana Unit Go Live Operations · FY26 · High confidence November

The Allana unit will go live by November.

— Paramjit Singh Chatha

Sales Mix

New Veg Facility Export Proportion Sales Mix · N/A · High confidence 60%

Sir, we, on our numbers, we plan to do around 60% exports from the total capacity.

— Paramjit Singh Chatha

What to watch in Q1 FY26

New Vegetarian Facility Go-Live and Commercial Production

next quarter

Current Expected September for go-live, October for commercial production

Target Commercial 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

Margin pressure due to QSR demand slowdown
medium

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

Management acknowledged
Volatility in agri-commodity prices (vegetables)
low

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
Delay in new vegetarian unit commissioning
low

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

Management acknowledged

Q&A highlights

7 direct

Reasons for margin decline in FY25 and future margin outlook. Direct

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

Detailed revenue projections for new facilities (Veg, Allana JV) and existing business by FY28-FY29. Direct

For this chicken facility, the existing non-vegetarian facility, we are projecting a 20% increase for this current financial year. With this 20% increase, we will be roughly at INR180-INR185 crores... The new vegetarian facility... will be able to generate close to INR200-INR210 crores revenue... For the Allana CF Foods Pvt Ltd, the JV company, that will be again close to INR180-INR190 crores kind of revenue. On total, we are looking at close to INR550 crores of revenue by FY28.

Provides a clear, quantified roadmap for future revenue growth, breaking down contributions from new and existing business segments.

Asked by Saiyam Soondhi

Reasons for doubling of receivables and plans for stabilization. Direct

One is that we had to extend the credit terms for key existing customers from the existing terms to 45 days in order to support the revenue generation. That was one thing. And the second is this new customer acquisition... operate on a higher credit terms as compared to our legacy clients, which has led to this increase in overall receivables.

Addresses a key working capital concern, explaining the strategic reasons behind the increase and outlining a target for stabilization.

Asked by Vinod Madathil Sasi

Underutilization of current veg capacity while adding new large-scale veg capacity. Direct

A veg current veg facility, sir, is a very small facility which we set up in '22. Right. So this was this facility was mainly set up for making plant-based products like the vegan mock meats, which unluckily couldn't take off... And the line is not big enough to onboard any large customers... So once the new veg facility comes up, then these machines for the existing small vegetarian unit will shift to the new vegetarian facility. And this 4,000 square foot or 5,000 square foot area will be merged into the chicken plant.

Clarifies the strategic rationale for new capacity despite existing underutilization, explaining the limitations of the old facility and the plan for its repurposing.

Asked by Kiran Paranjape

Impact of Jubilant (Domino's) setting up its own facility on Chatha Foods' volumes. Direct

Jubilant has, sir. Jubilant, Domino's has. Domino's has set up their own facility in Bangalore, but it has not affected our volume sir, because their volume has grown and it was shifted with a total agreement with us on the volumes they will pick up from us and the production they will do in their own Bangalore facility.

Addresses a potential competitive threat, confirming that Chatha Foods' volumes with a key customer remain unaffected due to overall market growth and pre-agreed terms.

Asked by Om Thakkar

Status of KFC onboarding and the nature of the engagement. Direct

For KFC, we are getting into a model of marination. So, we're going to marinate the chicken and -- so it's a trial they're doing. So, for this, as of now, we don't need to increase capacity... KFC wants to try, which they have implemented in a couple of countries and has been successful. So, that is why, as Vishal said, that it will be started as a 3 months trial.

Reveals a new strategic partnership with a major QSR, detailing the innovative service model (marination) and its trial phase, indicating future growth potential without immediate capacity constraints.

Asked by Deepali

Breakeven capacity utilization for the new vegetarian and JV facilities. Direct

So for this veg facility, it will be close to 45% capacity utilization. And for the JV facility, it will be close to 35% to 45% of the capacity utilization to be profitable to reach at the breakeven level.

Provides crucial operational targets for the new growth engines, indicating the utilization levels required for profitability.

Asked by Madhur Rathi

2 min read 6 chapters

Detailed narrative

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.

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.

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.

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.

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.

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.

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