Chothani Foods Limited

Consumer Defensive — Packaged Foods · BSE

₹10.39₹0.00 (0.00%)

DalalBaazaar Score

41 / 100

🟡 Moderate

Verdict

CAUTION

Risk

High

Driven by negative free cash flow, micro-cap size, which brings thin liquidity, a very high earnings multiple, which leaves little margin for disappointment.

In simple words: The business is earning a fairly low return on the money invested in it, but sales are shrinking. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:07 pm

Caution warranted. Multiple fundamental metrics — flagged in red below — point to either valuation stretch, leverage risk, or weakening profitability. This doesn't mean avoid the stock outright, but it does mean the burden of proof is on the growth story to justify the current price.

Understanding the Business

Company site ↗

The 60-second version of Chothani Foods Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Chothani Foods Limited manufactures and supplies in masala and spices in India.

IndustryPackaged Foods

SectorConsumer Defensive

Employees9

Annual revenue₹8 Cr

How does it make money?

Turns over ₹8 Cr a year. Of every ₹100 of sales, about ₹1 reaches shareholders as profit, with ₹6 left at the operating level before interest, tax and depreciation. Each of its 9 employees supports ₹92.6 lakh of revenue a year, the signature of a people-led business.

EBITDA margin6.5%

Net margin1.4%

Revenue / employee₹92.6 lakh

Who are its competitors?

The closest listed comparisons in its industry are NESTLE INDIA LIMITED, BRITANNIA INDUSTRIES LTD, TATA CONSUMER PRODUCT LTD, DABUR INDIA LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

NESTLE INDIA LIMITEDP/E 59.8x · ROE 79.9%

BRITANNIA INDUSTRIES LTDP/E 44.1x · ROE 51.0%

TATA CONSUMER PRODUCT LTDP/E 59.3x · ROE 7.5%

DABUR INDIA LTDP/E 34.7x · ROE 17.2%

What is its competitive advantage?Little sign of one

Returns on capital of 2.0% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

ROCE2.0%

ROE0.7%

Peer median ROE51.0%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +2% while net margin moved -13% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+2%

Margin effect-13%

DalalBaazaar Score

41/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ ROCE of 2.0% is below 10% — capital is not working hard
✗ ROCE has fallen by 3.1 points — returns are eroding
✗ EBITDA margin of 6.5% is thin — little cushion if costs rise
✗ Net margin of 1.4% is slim
• Revenue has compounded at 0.5% a year, which is the base these returns are earned on

Quality vs. Valuation

Company Quality

36/ 100

Weak

How good the business is, ignoring the share price entirely.

Valuation

42/ 100

Expensive

What you are being asked to pay, ignoring how good the business is.

Weak on business quality and not cheap enough to compensate.

Historical Valuation

Current P/E

94.5x

3Y Median

113.5x

40 monthly readings · mean 131.2x · range 63.8x–343.5x

Sector Median

51.7x

median of 4 sector peers

🟢Current valuation is approximately 17% below its 3y median of 113.5x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

⚠️Against its sector it trades 83% above the peer median of 51.7x.

vs. its own history

Fair

113.5x median over 40 months · -17%

vs. sector peers

Expensive

51.7x median of 4 peers · +83%

vs. generic bands

Expensive

Above 35x

P/E (Trailing)

94.5x

P/B

0.69x

EV/EBITDA

22.3x

PEG

—

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well2

Very low debt
Debt/Equity of 0.10x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention3

Free cash flow is negative
The business is not currently covering its capital spending from operations.
Return on capital is falling
ROCE has declined from 5.1% to 2.0% — often a sign of competition or overexpansion.
Inventory building faster than sales
Inventory is up 179% against revenue growth of 2% — stock may not be moving.

Red Flags

4 items require attention · 3 high · 1 watch

🔴Thin interest coverageFinancial
Operating profit covers interest only 1.9x — little room if earnings dip.
🔴Free cash flow negative for 3 yearsFinancial
The business has not covered its capital spending from operations for several years running, which has to be funded externally.
🔴Inventory building faster than salesFinancial
Inventory up 179% against revenue up 2% — stock may not be moving.
🟡Shareholders have been dilutedOwnership
Shares outstanding are up 101% over 3 years — each existing share owns a smaller slice of the company.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

A premium to the sector to defend
It trades 83% above the peer median. That premium needs a reason that persists, or it closes.
Growth barely outpaces inflation
Revenue compounding at 0.5% a year is close to the rate prices rise, so the business is gaining little ground in real terms. That leaves the share price dependent on a re-rating rather than on earnings growth.
Size brings its own risk
Micro Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.
Several serious flags at once
3 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 4%✓ 6.5%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA stays below 2x✗ 3.0x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
3Free cash flow remains positive✗ -₹0 Cr
Profit that never becomes cash eventually stops being profit.
4Interest cover stays above 3x✗ 1.9x
How much operating profit can fall before interest stops being comfortably covered.
5Revenue growth stays above 4% a year✗ 0.5% CAGR
Latest reported year was -8.1%. The bar is set below the established compounding rate, so ordinary variation does not trip it.

Investment Checklist

4 / 11 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✗ Revenue growing year-over-year
✗ Profit growing year-over-year
✗ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

3 good · 2 neutral · 6 weak

Market Cap

₹11 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

94.5x

Expensive

Expensive — verify against sector peers

P/B Ratio

0.69x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹0.11

Profitable

Profitable on a per-share basis

ROE

0.7%

Weak

Weak capital efficiency

ROCE

2.0%

Weak

Low return on total capital employed

Debt/Equity

0.10x

Low

Conservative leverage

Revenue Growth (YoY)

-8.1%

Shrinking

Sales are contracting

Profit Growth (YoY)

-16.8%

Falling

Profits are shrinking

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

-₹0 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹10.39

ROA

1.1%

Weak

Assets generate little profit

Operating Margin

1.8%

Weak

Thin margins leave little room for error

Net Margin

1.4%

Weak

Very little revenue reaches the bottom line

Current Ratio

4.20

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

-0.07

Defensive

Steadier than the market

52W Range Position

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

10.1 / 9.3

Bullish alignment (short > long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

96.1

Overbought zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹8 Cr	₹8 Cr	₹8 Cr	₹8 Cr	+0.5%
EBITDA	₹0 Cr	₹0 Cr	₹1 Cr	₹1 Cr	+4.6%
EBITDA Margin	5.8%	6.1%	7.3%	6.5%	—
PAT (Net Profit)	₹0 Cr	₹0 Cr	₹0 Cr	₹0 Cr	-4.1%
EPS	₹0.25	₹0.23	₹0.13	—	—
ROE	1.9%	0.9%	0.9%	0.7%	—
ROCE	5.1%	2.5%	2.3%	2.0%	—
Total Debt	₹2 Cr	₹1 Cr	₹1 Cr	₹2 Cr	-0.8%
Free Cash Flow	₹0 Cr	-₹5 Cr	-₹3 Cr	-₹0 Cr	—

🟡 Revenue has been broadly flat over 3 years (0.5% a year).

🟢 EBITDA has grown at 4.6% a year over 3 years.

🟡 EBITDA Margin has held roughly flat at 6.5% over 3 years.

🔴 PAT (Net Profit) has shrunk at 4.1% a year over 3 years.

🔴 ROE has fallen from 1.9% to 0.7% over 3 years (-1.2 pts).

🔴 ROCE has fallen from 5.1% to 2.0% over 3 years (-3.1 pts).

🟡 Total Debt has been broadly flat over 3 years (-0.8% a year).

🔴 Free Cash Flow has turned negative, from ₹0 Cr to -₹0 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹21 Cr

Total Liabilities

₹5 Cr

Total Debt

₹2 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

-₹0 Cr

Capex

—

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

77.4%

Peer Comparison

Company	P/E	ROE
NESTLE INDIA LIMITED	59.8x	79.9%
BRITANNIA INDUSTRIES LTD	44.1x	51.0%
TATA CONSUMER PRODUCT LTD	59.3x	7.5%
DABUR INDIA LTD	34.7x	17.2%

Recent News

1 mixed3 general

Chothani Foods dispatches 13th AGM notice for September 30, 2026

scanx.trade, 30 Sept

Swasth Foodtech India (BSE:544368) - Stock Analysis

Simply Wall Street, 28 Feb

Q2 Results Today: Hero MotoCorp, Lemon Tree Hotels, HAL, Glenmark Pharma among 1181 companies to post earnings on Nov 14

Livemint, 14 NovResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Sensex Today: BSE Sensex Falls Over 300 Points Amid US-Iran Tensions and Rising Oil Prices – Check Key Drivers, Top Gainers-Losers, What Should Investors Know

The Sunday Guardian, 14 Jul

Watch Items

Revenue growth is negative (-8.1%) on the latest reported period — check if this is one-off or a trend.
Trading very close to its 52-week low — worth checking whether this reflects a temporary setback or a structural problem.
Cross-check against the company's latest quarterly filing / investor presentation before acting.
RSI is in overbought territory — momentum entries here carry more short-term pullback risk.

DalalBaazaar Thesis

🔴Business QualityWeak5.9/20

🟡Financial HealthAdequate10.9/20

🔴GrowthWeak5.9/20

🔴ProfitabilityWeak4.5/15

🟡ValuationFair8.3/15

🟡RiskModerate5.4/10

Weak on the fundamentals

Poor scores on business quality without a price low enough to compensate. There is no obvious argument for owning this over a stronger company at a similar valuation. 3 high-severity red flags sit above this conclusion and should be read first.

This thesis breaks if

✓EBITDA margin holds above 4%6.5%
✗Debt / EBITDA stays below 2x3.0x
✗Free cash flow remains positive-₹0 Cr
✗Interest cover stays above 3x1.9x
✗Revenue growth stays above 4% a year0.5% CAGR