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Chatha Foods FY26: Building Capacity for a Bigger QSR Play

Chatha Foods Limited closed FY26 with revenue of 1,657 million rupees, up 5.4 percent year on year. EBITDA for the year stood at 122 million rupees, with an EBITDA margin of 7.4 percent. Profit after tax was 64 million rupees, up 5.5 percent.

While the full-year growth rate looks moderate, the company’s presentation highlights a stronger second half. H2 FY26 EBITDA margin improved to 8.0 percent from 7.1 percent in H2 FY25, and H2 FY26 PAT increased 22.6 percent versus the prior-year period. Management attributes FY26 performance to stronger engagement in the organized QSR ecosystem, deeper wallet share with existing clients, and continued onboarding of new QSR partners.

A B2B QSR supplier with scale and sticky relationships

Chatha Foods positions itself as a leading B2B processed and frozen food manufacturer in India, with 29 years of operating history. The company emphasizes long-standing institutional demand, including relationships with Domino’s and Subway, and lists other QSR and foodservice customers such as Burger King, Taco Bell, Popeyes, Chinese Wok, and multiple cafe and institutional brands.

A key feature of the business model is customer stickiness, but the company also discloses concentration. The presentation states that the top four customers account for 84 percent of revenue. That reliance can support volume stability when customers expand, but it also heightens counterparty risk. Chatha Foods acknowledges this indirectly through an explicit FY28E goal to bring the top four customer contribution below 40 percent.

The company also highlights portfolio breadth with 183 plus active SKUs. Product categories include flatbreads and tortillas, snacks and ready to eat items, a non-veg range, and gravies, pastes, and retort rice.

Financial summary (INR million)

Operating leverage is the core FY28 pitch

The presentation frames capacity headroom as a margin tailwind. It states that current utilisation is 65 percent of 7,800 MT operational capacity, translating to about 5,070 MT shipped. By FY28E, the company targets 80 percent utilisation of 30,800 MT across a three-plant network, implying shipped volume of about 26,180 MT.

This ramp-up is tied to Plant II and the Allana JV plant, which the company says have been commissioned. The strategic argument is straightforward. If demand scales into the expanded network, fixed costs get absorbed over a larger base, supporting operating leverage.

The balance sheet indicates meaningful project execution underway. Capital work in progress rose sharply to 782 million rupees in FY26 from 83 million rupees in FY25. Borrowings also increased, with long-term borrowings rising to 235 million rupees and short-term borrowings to 173 million rupees in FY26.

At the same time, cash and bank balance declined to 73 million rupees in FY26 from 204 million rupees in FY25. This pattern is consistent with an expansion phase, but investors will need to watch whether the new assets convert into incremental volumes and cash generation.

Mix shifts: veg, customers, and exports

Chatha Foods lays out three explicit mix shifts by FY28E.

First is product mix. In FY26, the presentation states the portfolio was about 96 percent non-vegetarian and 4 percent vegetarian. By FY28E, the company targets 65 to 70 percent non-vegetarian and 30 to 35 percent vegetarian. This is a significant repositioning and will likely require new product development, customer adoption, and scale-up execution.

Second is customer concentration. The company targets a shift from 84 percent revenue contribution from the top four customers in FY26 to less than 40 percent by FY28E. This implies that incremental growth is expected from a broader set of QSR, cafe, and institutional clients.

Third is geography. FY26 is shown as 100 percent domestic and 0 percent exports. By FY28E, the company targets exports of more than 45 percent. Management commentary references entering FY27 with confidence driven by the launch of exports and the commissioning of two new manufacturing plants.

The company also lists marketing initiatives that align with export outreach, including participation in the Indus Food Trade Show and Food Quest events in Bangkok and Kuala Lumpur.

Quality systems and execution capability

Chatha Foods highlights its R and D and quality framework. It describes an innovation pipeline from consumer trends to commercialization, and lists certifications including HACCP, ISO 9001, BRC, and FDA.

For a B2B supplier selling into large chains, consistency and compliance can be a decisive differentiator. These capabilities also matter if the company is to scale exports, which often requires adherence to tighter food safety standards.

Takeaways from FY26

Chatha Foods ends FY26 with improving second-half profitability and a clear operating leverage narrative anchored in capacity expansion. The presentation is also unusually explicit about its FY28E mix targets across product categories, customer concentration, and geography.

The investment debate now shifts to execution. The company is expanding capacity materially, borrowings have increased, and cash balances are lower. If utilisation moves toward the stated FY28 targets, the operating leverage thesis could strengthen. If demand scaling or diversification into vegetarian products and exports takes longer than expected, returns could be delayed.

For FY27, the company’s stated confidence is anchored in deeper QSR engagement, export launch, and the newly commissioned plants. The next few periods should show whether these initiatives translate into measurable volume gains and sustained margin improvement. */