Chatha Foods IPO Listing: Stock list at 30% Premium on BSE SME

Chatha Foods IPO Listing

Chatha Foods IPO Spices Up BSE SME with a Sizzling Debut

Chatha Foods, a leading frozen food processor from India, ignited the domestic capital market with a fiery initial public offering (IPO) on March 27, 2024.

This report delves deeper into the details of the IPO, its scorching listing performance, and the company’s recipe for success.

A Well-Seasoned Offering

The Chatha Foods IPO, simmering from March 19 to 21, whipped up a frenzy among investors. The total offering of ₹34 crore was oversubscribed a remarkable 19.28 times, exceeding even the most optimistic forecasts. This robust appetite was evident across all investor segments:

• Qualified Institutional Buyers (QIBs): These seasoned investors dished out a healthy 8.54 times subscription for their allocated portion.
• Non-Institutional Investors (NIIs): This segment displayed a particularly strong hunger, subscribing to their portion a whopping 44.52 times.
• Retail Investors: Retail investors weren’t far behind, demonstrating their confidence with a 14.60 times subscription for their share of the IPO.

A Delicious Serving of Listing Gains

The IPO price was set at a tantalizing ₹56 per share. On the listing day, March 27th, Chatha Foods shares debuted on the BSE SME platform, sizzling at a premium of ₹73.

This translated to a delightful 30% listing gain for the fortunate investors who participated in the IPO. The positive sentiment continued to simmer post-listing, with the share price reaching an upper circuit of ₹76.65, an additional 7% increase.

This translates to a total profit of around 37% for IPO investors by the close of the first trading day, leaving a sweet aftertaste in their mouths.

A Look at the Culinary Craftsmanship of Chatha Foods

Established in 1997, Chatha Foods has carved a distinct niche in the frozen food processing industry. They specialize in a diverse range of frozen meat products, catering to a variety of taste buds, including:

• Chicken appetizers: These bite-sized delights are perfect for parties, game nights, or a quick and convenient snack.
• Meat patties: From classic hamburgers to innovative fusion creations, Chatha Foods offers a variety of delicious patties.
• Chicken sausages: Available in a range of flavors and styles, these sausages are perfect for grilling, baking, or adding to stews and soups.
• Sliced meats: Offering convenience and versatility, Chatha Foods’ sliced meats are ideal for sandwiches, salads, or charcuterie boards.
• Toppings and fillers: These versatile ingredients add a burst of flavor and texture to pizzas, pastas, and other dishes.

Under the “Chatha Foods” brand, they manufacture over 70 different meat products, ensuring there’s something to satisfy every palate.

Their robust distribution network encompasses 29 distributors spread across 32 cities in India, ensuring their products reach a wide audience.

Building a Loyal Customer Base

Chatha Foods has established itself as a trusted supplier to major players in the food service industry. Their impressive client list includes the Indian franchises of:

• Domino’s: Delivering delicious pizzas with their signature toppings.
• Subway: Creating custom-built sandwiches with Chatha Foods’ high-quality meats.
• Cafe Coffee Day (CCD): Offering a variety of quick bites and snacks featuring Chatha Foods’ products.
• Wok Express: Serving up flavorful stir-fries with Chatha Foods’ frozen meat options.

This diverse clientele highlights the versatility and quality of Chatha Foods’ products, which cater to a wide range of culinary applications.

A Recipe for Financial Success

Chatha Foods has demonstrated a steady improvement in its financial health over the past few years. While the company faced some initial challenges, incurring a net loss of ₹4 crore in FY 2021, they implemented a successful turnaround strategy.

FY 2022 witnessed a remarkable comeback with a net profit of ₹67.24 lakh. This positive trend continued in FY 2023, with the net profit soaring to ₹2.45 crore, showcasing the company’s strong financial performance.

The company’s revenue has also grown significantly, registering a sizzling compound annual growth rate (CAGR) of over 38% to reach ₹117.24 crore in FY 2023.

This upward trajectory continued in the first half of the current financial year (April-September 2023), with the company achieving a net profit of ₹3.41 crore and a revenue of ₹70.78 crore. These figures demonstrate Chatha Foods’ ability to consistently generate profits and expand its market share.

The Future on the Menu: Chatha Foods Eyes Growth

Chatha Foods’ successful IPO and scorching listing performance are a clear indication of investor confidence in the company’s potential for continued growth.

The funds raised through the IPO, totaling ₹34 crore, will be a crucial ingredient in their recipe for future success. These funds are earmarked for two key areas:

• Expanding Production Capacity: A significant portion of the capital will be used to establish a new manufacturing unit. This expansion will allow Chatha Foods to increase production volume, cater to a larger customer base, and meet the growing demand for their frozen food products.
• Strategic Investments: The remaining funds will be utilized for various strategic initiatives. This may include investments in research and development to create innovative new products, expanding their distribution network to reach new markets, or implementing marketing campaigns to strengthen brand awareness.

A Growing Market with a Spicy Outlook

The Indian frozen food market is projected to experience significant growth in the coming years. Factors such as increasing urbanization, rising disposable incomes, and a growing demand for convenient and flavorful food options are driving this expansion. Chatha Foods is well-positioned to capitalize on this exciting market opportunity.

• Convenience Factor: Busy lifestyles and changing demographics are leading to a growing demand for convenient food options. Chatha Foods’ frozen products cater perfectly to this need, offering consumers a quick and easy solution for preparing delicious meals.
• Quality and Consistency: Chatha Foods has established a reputation for high-quality products with consistent taste and texture. This focus on quality is essential for building brand loyalty and attracting new customers.
• Product Diversification: With a diverse product portfolio encompassing over 70 different frozen meat items, Chatha Foods caters to a wide range of consumer preferences. The company’s ability to innovate and introduce new products will be crucial for maintaining its competitive edge.

Building a Sustainable Future

As Chatha Foods embarks on its next chapter of growth, the company remains committed to sustainable practices. This may include:

• Sourcing: Implementing responsible sourcing practices to ensure the use of ethically procured ingredients.
• Manufacturing: Focusing on energy-efficient production processes and minimizing waste generation.
• Packaging: Utilizing eco-friendly packaging materials to reduce their environmental footprint.

By integrating sustainability into their operations, Chatha Foods can not only contribute to a healthier planet but also resonate with environmentally conscious consumers.

Final Remarks

Chatha Foods’ fiery IPO debut has set the stage for an exciting future. With a strong financial performance, a loyal customer base, and a clear vision for growth, the company is well-positioned to become a major player in the Indian frozen food market.

Their commitment to innovation, quality, and sustainability further strengthens their position. As they expand their production capacity, diversify their product offerings, and tap into the growing demand for convenient and delicious frozen food options, Chatha Foods is poised to continue its sizzling journey towards success.