Chatha Foods Ltd. IPO: Review, Valuation, Opening Date & GMP

Chatha Foods Limited (CFL) IPO  - Complete Overview

Established in 1997, Chatha Foods Limited (CFL) is a prominent frozen food processor specializing in supplying top Quick Service Restaurants (QSRs), Casual Dining Restaurants (CDRs), and other participants in the HoReCa (Hotel-Restaurant-Catering) sector.

CFL manufactures and markets a diverse range of products including pizza toppings, sandwich fillings, burger patties, snacks, plant-based sausages, salami, and pepperoni, as well as Indian snacks like kebabs, tikkas, and samosas. Additionally, CFL offers plant-based nuggets and burger patties, along with grilled burger patties to select QSRs, CDRs, and other HoReCa segment players such as Domino's & Subway's India franchise, Café Coffee Day, and Wok Express, etc.

Under the brand name "Chatha Foods," the company distributes its products through a network of 29 distributors spanning 32 cities across India, servicing 126 mid-segment and standalone small QSR brands.

All CFL products are manufactured at its state-of-the-art Manufacturing Facility located in District Mohali, boasting a production capacity of approximately 7,839 metric tons for all frozen food items annually, operating over 2 shifts.

In 2023, the prestigious Indian public market investor, Negen Undiscovered Value Fund, made a significant investment in CFL, acquiring a 10% stake in the company.

Chatha Foods Limited (CFL) IPO Overview

Chatha Foods Limited (CFL) IPO date is slated to be open for subscription from March 19, 2024, to March 21, 2024. This BSE SME IPO follows a Book Built Issue IPO.

Chatha Foods Limited (CFL) IPO price is set in the range of Rs.53 to Rs.56 per share. 

The total issue size of this IPO amounts to Rs.34.00 Cr. The company has allocated 35% to retail investors, 50% to institutional and 15% to non-institutional investors.

 

 

Company Financial

Compared to the previous financial years, Chatha Foods Limited (CFL) has seen growth in total assets, net worth, and total revenue. The profit after tax has increased while the total borrowing also increased.

(Amount in Lakhs)

Period	30 Sep 2023	31 Mar 2023	31 Mar 2022
Total Assets	5,827.62	5,141.94	4,830.31
Total Revenue	7,078.03	11,724.23	8,740.31
PAT	341.04	245.20	67.24
Net worth	2,516.15	2,175.12	1,929.93
Reserve & Surplus	862.66	935.00	689.81
Total Borrowings	987.96	1,060.19	1,101.33

 

The Objective of the Issue

The net proceeds of the Issue, i.e. gross proceeds of the Issue less the Issue-related expenses (“Net Proceeds”) are proposed to be utilised to fulfil the following objectives:

1. Establishment of the Proposed Manufacturing Unit.

2. Meeting General Corporate Needs.

 

 

Peers of Chatha Foods Limited (CFL) IPO

Name of the Company	Face Value (Rs)	EPS (Rs)	P/E Ratio
Chatha Foods Limited	10	1.48	-
Tasty Bite Eatables Limited	10	117.73	114.23

 

Evaluation

The IPO is priced within the range of Rs.53 to Rs.56 per share.

Evaluation of P/E Ratio

• Considering the FY23 EPS of Rs 1.48 from the last year, the resulting P/E ratio is 37.76x.

• Taking into account the weighted EPS of Rs 0.47 for the last three years, the P/E ratio amounts to 119.14x.

Comparative Analysis with Listed Peers

• The industry's average P/E is 114.23x.

As a result, the IPO price range, with a P/E ratio ranging from 37.76x to 119.14x, seems fully priced to the industry average of 114.23x.

 

IPO's Strengths 

• Ensuring a Robust Supply Chain and Input Sourcing System for Quick Service Restaurants (QSRs), Casual Dining Restaurants (CDRs), and Other Outdoor Dining Options in India.

• Establishing Strong Entry Barriers within the Industry the Company Operates In.

• Consistent and Timely Delivery of High-Quality Products is Crucial for QSRs, CDRs, and Other Outdoor Dining Options in India.

• Cultivation of a Diverse Vendor Base, Achieved through Focused Efforts Over Time, Serves as a Significant Competitive Advantage.

• Development of In-house Manufacturing Plant Layout & Designing Expertise, Aligned with GFSI Approved Global Food Safety Standards.

• Serving Customers of Global Repute with Sound Financial Standing, Committed to Maximizing Shareholder Value.

• Adherence to Quality Compliance, Control, and Standards.

• Maintaining a High-Quality Manufacturing Facility.

• Bolstered by an Experienced Promoter & Management Team, Who Recently Increased Their Shareholding.
  
  

 

 

IPO weaknesses 

• Pat records indicate negative cash flow for the company.

• As of the current date, the company has not secured the necessary approvals, clearances, and permissions from relevant authorities for the proposed Manufacturing Facility.

• The company is obligated to meet rigorous quality control standards, and any instances of product defects could significantly affect its operations.

• Failure to obtain, renew, or maintain statutory and regulatory licenses, registrations, and approvals necessary for business operations could have detrimental effects.

• The company operates within a fiercely competitive industry landscape.

 

IPO GMP Today

The Latest GMP of Chatha Foods Limited (CFL) IPO is Rs.13.

 

Chatha Foods Limited (CFL) IPO timetable (Tentative)

Chatha Foods Limited (CFL) IPO is scheduled from March 19 to March 21, 2024, with allotment on March 26, refund initiation on March 27, and listing on March 27, 2024.

Events	Date
IPO Opening Date	March 19, 2024
IPO Closing Date	March 21, 2024
IPO Allotment Date	March 26, 2024
Refund initiation	March 27, 2024
IPO Listing Date	March 27, 2024

 

Chatha Foods Limited (CFL) IPO Details 

Chatha Foods Limited (CFL) IPO, with a face value of Rs.10 per share, opens on March 19 and closes on March 21, 2024, offering 5,962,000 shares at Rs.53 to Rs. 56 per share, with a lot size of 2000 shares, aiming to raise Rs.34.00 Cr, and will be listed on BSE SME.

IPO opening & closing date	March 19, 2024 to March 21, 2024
Face Value	Rs.10 per Share
Issue Price	RS.53 to Rs.56 per Share
Lot Size	2000 Shares
Price of 1 lot	Rs.112,000
Issue Size	5,962,000 shares (aggregating up to Rs.34.00 Cr)
Fresh issue	5,962,000 shares (aggregating up to Rs.34.00 Cr)
Listing at	BSE SME
Issue Type	Book Built Issue IPO
Registrar	Skyline Financial Services Private Ltd

 

 

Chatha Foods Limited (CFL) IPO Lot Details 

For Chatha Foods Limited (CFL) IPO, the retail investor minimum and maximum lot investments are both 1 lot (2000 shares) at Rs.112,000 while for HNI investors, the minimum investment is 2 lots (4000 shares) at Rs.224,000.

Minimum Lot Investment (Retail)	1 Lot
Maximum Lot Investment (Retail)	1 Lot
Minimum Lot Investment (HNI)	2 Lot

 

Chatha Foods Limited (CFL) IPO Reservation

Institutional share Portion	50%
Non-institutional share Portion	15%
Retail share Portion	35%

 

Promoters and Management of Chatha Foods Limited (CFL)

• Paramjit Singh Chatha

• Gurcharan Singh Gosal

• Gurpreet Chatha 

• Anmoldeep Singh

Pre-issue Promoter shareholding	81.36%
Post-issue Promoter shareholding

 

Chatha Foods Limited (CFL) IPO Lead Managers

• Indorient Financial Services Ltd

 

 

Dividend Policy

The company did not issue dividends in previous financial years. Future dividend distributions will be subject to the financial performance of the company.

Conclusion

Chatha Foods Limited presents an appealing investment opportunity for potential investors in its upcoming IPO. The company demonstrates strong financial performance supported by a robust supply chain. However, it operates within a competitive market environment. Investors are encouraged to thoroughly assess all relevant factors before participating in the IPO to ensure optimal results.