top of page

Chatha Foods IPO Review


Chatha Foods IPO Review


Chatha Foods, a name synonymous with quality and tradition, has its roots deeply embedded in the rich culinary heritage of its city of origin. Founded by a visionary promoter family, Chatha Foods embarked on its gastronomic journey with a clear mission: to bring authentic flavors to the forefront and celebrate the diversity of regional cuisines.


The inception of Chatha Foods dates back to 1997, when the founding family, driven by their passion for food and a desire to share their family recipes, decided to establish a business that would honor their culinary legacy. The city, known for its vibrant food culture, served as the perfect backdrop for Chatha Foods' beginning.


Promoter Family Members:

  • Paramjit Singh Chatha: Appears to be a key figure, possibly the founder of Chatha Foods.

  • Gurpreet Chatha: Listed as a promoter in the company's DRHP.

  • Gurcharan Singh Gosal: Another promoter mentioned in the DRHP.

  • Anmoldeep Singh: Another family member listed as a promoter in the DRHP. 

What started as a small family-run operation has now blossomed into a reputable brand, thanks to the unwavering commitment to quality and an unrelenting pursuit of excellence. The business was started not just as a means of livelihood but as a tribute to the ancestral knowledge of food and cooking techniques passed down through generations.


Today, Chatha Foods stands as a testament to the family's dedication and hard work, continuing to thrive and expand while staying true to the core values that have shaped its success.


Competitive Strengths


Chatha Foods has established itself as a formidable player in the food industry, showcasing robust competitive strengths that have translated into impressive financial outcomes.




Revenue, Sales, and Profit



The company's revenue streams have seen a consistent upward trajectory, underpinned by strategic market positioning and an expansive product portfolio that resonates with diverse consumer preferences. Sales figures reflect the brand's strong market penetration and customer loyalty, with repeat business bolstering the bottom line. Profit margins have been on the rise, a testament to Chatha Foods' operational efficiency and cost-effective supply chain management. The firm's ability to innovate and adapt to market trends continues to drive its financial success.


According to the company's reports, its financial performance has significantly improved, particularly in the first half of FY24, when it brought in Rs 3.42 crore on a total revenue of 70.78 crore. Due to the introduction of a new supply chain for vegetarian food, which has the potential to grow and profit the business, they suppressed the revenue in H1–FY24. They reported sales of Rs. 117.24 crore and net profit of Rs. 2.45 crore for FY23, demonstrating a notable improvement in both areas. Despite their strong financial results, they have now chosen to go public on the market.


Distribution Network and Geographical Reach


Chatha Foods has established a robust distribution network that spans across multiple regions, ensuring their diverse range of food products is accessible to a wide customer base. They rely on a network of 29 distributors to cater to various clients. Their logistical operations are strategically designed to optimize the efficiency of product delivery, from the point of origin to various retail outlets. The company's geographical reach extends beyond local boundaries, tapping into international markets to cater to global consumer demands. This expansive network is supported by advanced supply chain management systems that monitor and manage the flow of goods, guaranteeing freshness and quality upon arrival. This network covers 32 cities across India, ensuring a wide presence in the country. With a commitment to sustainability, Chatha Foods also incorporates eco-friendly practices in its distribution processes, reducing environmental impact while maintaining high service standards.


Unique Features


Chatha Foods, renowned for its distinctive culinary offerings, stands out in the food industry. Its unique features include a diverse range of authentic, traditional recipes that have been passed down through generations, ensuring an original taste that's hard to find elsewhere. The use of high-quality, locally sourced ingredients supports sustainability and provides a fresh, natural flavor to their dishes. Moreover, Chatha Foods' commitment to health is evident in its menu options, which include organic and gluten-free choices catering to various dietary needs. Their innovative approach to fusion cuisine also allows for creative combinations of flavors and textures, making each meal an exciting culinary adventure.


Investment In Research and Development


Chatha Foods has consistently prioritized investment in research and development (R&D), recognizing it as a crucial driver of innovation and competitive advantage. This strategic focus on R&D has enabled the company to explore new frontiers in food technology, leading to the creation of healthier, sustainable, and more diverse food products. By allocating substantial resources towards R&D, Chatha Foods is not only enhancing its product offerings but also contributing to the advancement of the food industry as a whole. Their commitment to R&D reflects a deep understanding of the dynamic nature of consumer preferences and the importance of staying ahead in a rapidly evolving market.




Chatha Foods IPO


  • Issue Date: The issue date, also known as the offer date, signifies the day when the company officially starts offering its shares to the public for purchase. This marks the beginning of the subscription period during which investors can submit their bids to buy the shares at the offered price. (Issue Date: March 19, 2024 to March 21, 2024).

  • Listing Date: The listing date refers to the day when the company's shares are officially listed and begin trading on a stock exchange. This is typically several business days (3-6 days) after the issue date after processes like share allotment and finalization are completed. On this date, investors who were allotted shares during the IPO can begin selling them, and new investors can start purchasing them on the exchange at the prevailing market price. (Listing Date: March 27,2024).

  • Face Value of Shares: The face value of shares is the nominal value of a stock that is determined by the issuer at the time of issuing the shares. It is usually a small amount, that does not reflect the actual market value of the shares. The face value of shares is used to calculate the accounting value of a company's equity, as well as the dividend payments and the par value of bonds. ( IPO Face Value: INR 10 per share).

  • Price Band: A price band of an IPO is the range of prices within which the investors can bid for the shares of a company that is going public. The price band is set by the issuer and the lead managers of the IPO, based on various factors such as the demand and supply of the shares, the financial performance and valuation of the company, and the market conditions. (IPO Price: INR 53 to INR 56 per share).

  • Lot Size: The lot size refers to the minimum number of shares an individual investor can apply for. This is set by the issuing company and aims to streamline the application process and manage the distribution of shares. Investors can then apply for multiples of the lot size, but not for quantities below it. (Lot Size: 2000 Shares).

  • Total Issue Size: The total issue size represents the total number of shares the company is offering to raise capital through the IPO. This number is determined by the company and its advisors, considering factors like their funding needs and the expected investor demand. The total issue size is then divided by the lot size to determine the total number of lots available for purchase by investors. (Total Issue Size: 5,962,,000 shares (aggregating up to ₹34 Cr)).

  • Fresh Issue: Fresh issue in an IPO refers to the new shares a company creates and sells to the public for the first time during the offering. This is the primary way a company raises capital through an IPO. The money raised from the fresh issue is used for various purposes as outlined in the company's prospectus, such as funding expansion plans, repaying debt, or investing in research and development. (Fresh Issue: 5,962,000 shares (aggregating up to ₹34 Cr)).

  • Issue Type: The type of an IPO can vary depending on the market and regulatory conditions. Some of the common types of IPOs are, Fixed priced IPO, Auction IPO, Book Building IPO, and Hybrid IPO. (Issue Type: Book Building IPO).

  • Listing At: An integral part of the IPO process is the listing. This refers to the day the company's shares officially begin trading on a stock exchange, such as the National Stock Exchange (NSE) or the Bombay Stock Exchange (BSE) in India. Once listed, anyone with a brokerage account can buy and sell the company's shares on the exchange. (Listing at: BSE SME).

  • Retail Shares Offered: This refers to the portion of the total shares being made available specifically for individual investors, distinct from institutional investors like banks or hedge funds. Regulatory bodies often mandate a minimum percentage of shares be reserved for retail investors, aiming to promote broader public participation in the capital markets. (Retail Shares Offered: 1,982,000 (33.24%)).

  • QIB Shares Offered: These shares are offered to institutions like mutual funds, insurance companies, foreign institutional investors (FIIs), banks, and other financial institutions registered with SEBI (Securities and Exchange Board of India). QIBs typically invest large sums of money, and SEBI regulations mandate a minimum investment amount for this category. Due to their significant investment power, QIBs are often allocated a minimum percentage (usually 50%) of the total IPO shares.(QIB Shares Offered: 1,132,000 (18.99%)).

  • NII (HNI) Shares Offered: NIIs are investors who are not QIBs or retail investors. They include high net-worth individuals (HNIs), corporate bodies, trusts, societies, etc., who bid for more than Rs 2 lakhs worth of shares in an IPO. NIIs can bid for up to 15% of the total shares offered in an IPO. NIIs have to pay 100% of the bid amount at the time of application. NIIs cannot bid at the cut-off price, which is the highest price at which the shares are allotted. HNIs are a sub-category of NIIs who bid for more than Rs 10 lakhs worth of shares in an IPO. (NII Shares Offered: 8,50,000 (14.26%)).


Competitors Of Chatha Foods


In the dynamic and competitive landscape of the food industry, Chatha Foods stands out as a prominent player. However, it faces stiff competition from various companies that are vying for market share and consumer preference. Among its top competitors are Preparedfoods, MTR Foods, and Foods Pacific, each bringing unique offerings and strategies to the table.


Preparedfoods, with its headquarters in Troy, Michigan, was founded in 2015 and has since been a significant rival to Chatha Foods. It operates in the same industry and generates approximately 66% of Chatha Foods's revenue.


MTR Foods, another formidable competitor, was established in Bangalore, Karnataka in 1924. With nearly a century of experience and a broader employee base, MTR Foods presents a challenge to Chatha Foods with its extensive range of products and deep market penetration.


Foods Pacific, headquartered in Sacramento, California, is also perceived as one of Chatha Foods's biggest rivals. Although financial details are not disclosed, its presence in the industry is notable.


Other notable competitors include Savoury Systems, iD Fresh Food, Kohinoor Foods, Gits, Maiyas, ITC, McCain Foods, Capital Foods, Priya Foods, and Bakkavor. These companies collectively have raised over 92.3M and employ an estimated 66.8K employees.


The competition is not just about the numbers; it's about innovation, quality, and customer satisfaction. Chatha Foods must continuously evolve and adapt to maintain its position in the market amidst these strong contenders.


Conclusion


Chatha Foods' IPO presents a compelling opportunity for investors seeking to diversify their portfolio with a stake in the food industry. The company's robust financial performance, coupled with its strategic growth plans, positions it well for future success. While there are inherent risks, as with any investment, the potential rewards seem promising given Chatha Foods' strong market presence and commitment to innovation. Investors are advised to conduct thorough due diligence and consider their long-term investment goals when evaluating this IPO.


Please read the detailed IPO related information Here.


Disclaimer: This is not an investment advisory. The article above is for information purposes only. Investments in the securities market are subject to market risks, read all the related documents carefully before investing. Please consider your specific investment requirements, risk tolerance, goal, time frame, risk and reward balance, and the cost associated with the investment before choosing securities, that suit your needs. The performance and returns of any equity stock can neither be predicted nor guaranteed.


FAQs


Q: What is an IPO?

An Initial Public Offering (IPO) is the process by which a privately held company offers its shares to the public for the first time. It allows the company to raise capital by selling shares to investors and get listed on a stock exchange.


Q: How can I apply for an IPO?

To apply for an IPO, follow these steps:

Open a Demat account with a registered Depository Participant (DP).

Choose the IPO you want to apply for.

Fill out the IPO application form through your broker or online platform.

Specify the number of shares you wish to apply for and the price range (if it’s a book-building issue).


Q: What is ASBA (Application Supported by Blocked Amount)?

ASBA is a payment method for IPOs where the bid amount is blocked in your bank account until the allotment process is complete. It ensures that you have sufficient funds to cover the shares you applied for.


Q: Can I make payments through UPI for an IPO?

Yes, you can use the Unified Payments Interface (UPI) to apply for an IPO. Many banks and brokers allow UPI-based payments during the IPO application process. Make sure your UPI ID is linked to your bank account.


Q: What is the difference between a fixed price issue and a book-building issue?

Fixed Price Method: The company determines a fixed price for issuing shares, and investors know the exact price before the IPO.

Book Building Method: The company offers a price range, and investors bid within that range. The final price is determined after the bidding process.


Q: What is the difference between the floor price and cut-off price in a book-building issue?

Floor Price: The lowest price at which an investor can bid within the price range.

Cut-off Price: An option where investors bid at the highest price (or cap price) without specifying a bid amount. They receive the allotment at the final determined price.


Q: What does ‘DP name’ mean in an IPO online form?

DP Name: It refers to the name of your Depository Participant (DP) with whom you hold your Demat account. You need to provide this information while applying for an IPO.


Q: What are the different investor categories in an IPO?

RII (Retail Individual Investor): Individual investors who apply for a small number of shares.

NII (Non-Institutional Investor): High-net-worth individuals, corporate bodies, and trusts.

QIB (Qualified Institutional Buyer): Institutional investors like mutual funds, banks, and foreign institutional investors.

Anchor Investors: Institutional investors who invest before the IPO opens for subscription.


Q: How is the allotment process done in an IPO?

The allotment process considers various factors, including investor categories, oversubscription, and the price at which bids are placed. The final allotment is based on demand and availability of shares.


Q: What happens if I don’t get the full allotment of shares in an IPO?

If the number of allotted shares is less than what you applied for, the excess funds are refunded to your bank account. You’ll receive the allotted shares, and any remaining funds will be returned.



26 views0 comments

Recent Posts

See All

Kommentare


bottom of page