Chatha Foods Limited deals in frozen food processors and serves top quick serving restaurants (QSR), casual dining restaurants (CDR) and other players in the hotel-restaurant-catering (HoReCa) segment. Chatha Foods IPO shall be raising Rs 34.00 crores. The issue is entirely a fresh issue of 59.62 lakh shares.
IPO opens
Mar 19, 2024
IPO Closes
Mar 21, 2024
IPO Size (Rs.)
₹34.00 Cr
IPO Size (shares)
5,962,000 shares
Breakup
Fresh issue only
Face Value:
₹10
IPO Price in Rs :
₹53 to ₹56 per share
Minimum Lot
2000 Shares
Listing At
BSE SME
QIB Quota
~50%
NII Quota
~15%
Retail Quota
~35%
Lead Manager
Indorient Financial Services
Registrar
Skyline Financial Services
Market maker
Alacrity Securities.
.
About Chatha Foods Limited:
Chatha Foods Limited is a frozen food processor, serving top QSRs, CDRs and other players in the hotel-restaurant-catering (HoReCa) segment like Domino’s & Subway’s India franchise, Café Coffee Day, Wok Express, etc.
Chatha Foods Limited manufacturing facility is in District Mohali, Punjab with a production capacity of approximately 7,839 metric tons for frozen food products.
They are deeply connected with the Indian food services/dining out industry and this accounted for almost the entire revenue for the six months ended September 30, 2023.
Their brands, which sells under “Chatha Foods” are distributed through our network of 29 distributors covering 32 cities across India and catering to the needs of 126 mid segment & standalone small QSR brands.
Company has four Promoters, namely; Paramjit Singh Chatha, Gurpreet ChathaGurcharan Singh Gosal, Anmoldeep Singh,
Financials: Chatha Foods IPO
Particulars (₹ in Lacs.)
2023 (06)
2023 (12)
2022 (12)
2021 (12)
Total revenues
7,078.03
11,724.23
8,740.31
6,119.03
EBITDA
659.64
708.95
445.81
-203.5
EBITDA (%)
9.32%
6.05%
5.10%
-3.33%
PAT
341.04
245.2
67.24
-400.35
PAT (%)
4.82%
2.09%
0.77%
-6.54%
Net Worth
2,516.15
2,175.12
1,929.93
1,862.68
Post issue Share Capital
2250
FV
10.0
IPO price
56.0
EPS Fy23
1.1
PE Fy23
51.4
EPS Fy24 (annualized)
3.0
PE Fy24 (annualized)
18.5
Market cap in Lacs
12,600
Market cap / Sales
1.07
Anchors: Chatha Foods Limited
Chatha Foods Limited: Salient Points
From the total net proceeds from then IPO, the company aims to use Rs 24.11 crore for setting up a manufacturing facility in Mohali and the remaining amount for general corporate purposes.
Negen Undiscovered Value Fund bought the largest portion in the anchor issue.They had earlier too invested in the company in 2023 and holds a 10 % stake.
Peers:
Company
CMP (₹)
Revenue(₹cr)
Net Profit(₹ cr)
NPM %
PE
Macp/sales
RONW%
Chatha Foods
56
117.2
2.5
2.1%
29(19.8)
1.1
11.95
Tasty Bite Eatables
12,600
489.4
30.2
6.2%
67.2
5.98
12.41
Tasty eatables is not strictly comparable as it has significant presence in Exports markets.
It also sells products under its own brand “Chatha Foods” . This done through a network of 29 distributors, catering to 126 mid segment and standalone small QSR brands.
They have a good reach with international & local QSRs
The company is operating on B2B model and will add B2C model going forward.
For six months ended Sept 30, 2023, Domino’s India franchise was its largest customer and accounted for 44 per cent of its revenue in this period. This was followed by Subway’s India franchise (27 per cent) , Chili’s & Pauls at 2.26 per cent, Wok Express at 3.45 per cent, Cafe Coffee Day at (1.24 per cent), and Burger Singh accounted for 0.76 per cent.
As per management loss in FY21 was primarily due to adverse impact of Covid-19 on the QSR industry.
Non-vegetarian products make for the majority of its revenues. It has forayed into vegetarian products only recently in 2022 and intends to expand this share.
Chatha Foods IPO is coming at a PE ratio of 51x (fy23 earnings) and 18.5x (Fy24 annualized earning)
I am likely to apply in Chatha Foods IPO subject to availability of funds and response on Day3. There is an element of risk as Market conditions right now are quite bad for new listings. This can spread to SMEs as well.
It may be noted that many times my expectations have proved to be wrong & I have been forced to sell or hold the stock in loss. Current market conditions call for lot of caution.
GMP as per Social media is around Rs. 5. It may be noted that such rates are perhaps in thin deals and may not be even indicative. I steer clear of any deals in GMP however lucrative they may appear, nor I have any access to any grey market operator.
SME IPO are much more risky and volatile than mainboard IPOs.
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management. I have in the past cleared some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. These certifications are for 3 year period and are no more valid. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF/IPO investments have high degree of inherent risk.
