Chatha Foods - A proxy play for QSR

Stock Opportunities Untested - but worth a good look
23

Agree absolutely

I find it strange as well them entering into B2C when the ongoing project of Allana JV and the veg plant are still going and haven’t settled and started contributing

Having said that the price correction which we have seen in this stock makes it attractive at current levels. Mcap/Sales is only 1.2x now

With veg plant coming online and assuming they can do 3-4x fixed asset turnover the top line in FY28 could be anywhere between 180-240crs. Even at the current valuations you don’t lose money

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24

Recent appointments for the position of Chief Marketing Officer and Chief Operating Officer shows company is serious in upping its game by hiring senior level people with relevant experience.

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25

Now company has hired a Investor Relations firm and decided to participate in a food trade fair in Noida (may be first time, not sure). Last few days announcements shows that company is putting in place a team and org structure for sustainable long term growth.

Disclosure : Continues to add more as story improves

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26

Amazing photos of the stall and vegetarian products displayed by company at the Indus Food Fair at Noida. Impressed with the presentation for the first time exhibitor.

Take a look at impressive institutional menu (downloaded from company website)
institutional-menu.pdf (5.4 MB)

Disclosure - invested for last 1 year. Continue to add

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27

Research report by Equivision.

Now company arranged concall after a long time today at 4pm

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28

I have asked Below questions in recent concall:

1)Management has previously emphasized a strict B2B and institutional focus to avoid the pricing wars and high customer acquisition costs of the B2C segment. However, we are now seeing a significant push into B2C with the Unifayre brand.Given that our Trade Receivables have already doubled YoY (from ₹11 Cr to ₹22 Cr), how does the board justify the high working capital and marketing spend required for a B2C launch?

Management reply: They are fully focused on B2B only and not investing much/minimum in B2C segment.

My thoughts: When established B2C, Tasty bites are struggling in B2C, why Chatha is trying B2c

  1. Do we have BRC, FDA, and EU approvals to our new veg plant & Allana plant , when we can get this approvals and sell?
    Management reply: They are in the process of getting BRC, FDA & EU approval. time line 3-6 months.

My thoughts: It shows Export from Veg plan will take time. they should try hard for domestic Utilization for FY-27

3)Regarding our high-value institutional tie-ups, could management provide a definitive update on the commercial rollout status of the KFC marination project.

Management reply:It is on Pause due to merger of KFC & Saphire Foods

4)“Management has guided for a 3x revenue jump to ₹600 Cr and a 5x-6x PAT increase by FY28, supported by a total capacity of ~31,000 MT (7,840 MT Non-Veg + 16,000 MT Veg + 7,000 MT Allana JV).
On Utilization: To reach that ₹600 Cr target, what are your specific capacity utilization targets for this combined 31,000 MT for FY27 and FY28?
On Margins: As we scale, what are the anticipated Gross Margin and PAT profiles for the new Veg and Allana segments compared to our current core business?”
Management reply:

for FY-27
25-30% Utilization for veg without export 60cr

alana: 50% capacity utilization-> 90cr

non veg:180cr

kind of 325cr to 350cr

Planning to go for full utilization in 3 years.

gross Margin :

veg: 32%

non veg : 27%

Allana : ?32%

PAT : Double Digit

peak revenue : 550cr, GM :32%, ebita margin : 16%, PAT : Double Digit

5)At the Indus Food 2026 fair, what was the specific response from international retail chains for the Unifayre range? Have any of these ‘meaningful interactions’ converted into ‘Letter of Intents’ (LOIs) or firm purchase orders that will utilize the new 16,000 MT Veg capacity in FY27?"

Management reply: Did not got any LOI

MY Over all Thoughts:
They have ramped there capacity from 8k to 30K. they got IPO funds, debt & Pref funds and built 16K Veg and 8K Allana Foods(JV). Now we need to watch how fast they can Utlize capacity by domestic & export market.
Disc: Invested

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29

Do you think management is looking at B2C because there are yet no solid buyer in B2B yet, which could be a potential risk ?

Asked since you are tracking it and asking good questions to the management….

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30

Allana non veg plant already got FSSC certification. With Allana brand and access, i think they can export to Middle east with less than 50% utilization for next financial year.
New Veg Plant not yet got any certifications like BRC, FDA, FSSC, it may take 3-6 months time. but they can sell in domestic B2B or B2C market. they are claiming they are just testing ground and not invetsing much in B2C.

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