The company, incorporated in January 1982 and once a household name in West India's branded pickles segment, operates through two divisions: Food Division and Food Park Infrastructure Division. However, its financial trajectory over recent years paints a concerning picture of a business facing structural headwinds in an increasingly competitive FMCG landscape.
Financial Performance: A Troubling Multi-Year Decline
Chordia Food's financial performance over the past five years reveals a business in structural decline. Annual sales have contracted from ₹80.00 crores in FY22 to ₹60.00 crores in FY19, representing a compounded annual decline of 45.66%. More concerning is the deterioration in operating profitability, with the operating profit margin (excluding other income) collapsing from 14.3% in FY12 to negative 2.5% in FY22.
| Period | Net Sales (₹ Cr) | YoY Growth | Operating Margin | PAT (₹ Cr) | PAT Margin |
|---|---|---|---|---|---|
| Jun'22 | 29.28 | +60.09% | 0.99% | -0.55 | -1.88% |
| Mar'22 | 23.60 | +16.54% | -2.12% | -1.08 | -4.58% |
| Dec'21 | 21.41 | +17.12% | 0.33% | -0.53 | -2.48% |
| Sep'21 | 17.39 | — | -1.21% | -0.90 | -5.18% |
| Jun'21 | 18.29 | — | -8.58% | -2.25 | -12.30% |
| Mar'21 | 20.25 | — | 4.59% | 0.44 | 2.17% |
The quarterly trend data reveals persistent losses across most recent quarters, with only sporadic periods of marginal profitability. In Q1 FY23 (Jun'22), whilst revenue showed strong year-on-year growth of 60.09% to ₹29.28 crores, the company still posted a net loss of ₹0.55 crores. This inability to convert revenue growth into bottom-line profitability highlights fundamental issues with cost structure and operational efficiency.
Operational Challenges: Eroding Returns and Quality Concerns
The company's return ratios paint a stark picture of deteriorating capital efficiency. The average Return on Equity (ROE) over the past five years stands at a meagre 2.36%, significantly below acceptable thresholds for a consumer goods company. Even more concerning is the average Return on Capital Employed (ROCE) of negative 4.17%, indicating that the company is destroying shareholder value rather than creating it. The latest ROCE figure of 5.42%, whilst positive, remains well below industry standards and reflects a business struggling to generate adequate returns on invested capital.
Critical Concern: Sustained Profitability Crisis
Key Issue: Chordia Food has reported losses in four of the last six quarters presented, with FY22 closing with a full-year loss of ₹4.00 crores. The company's inability to maintain consistent profitability despite operating for over four decades raises serious questions about business model viability and competitive positioning in an increasingly consolidated FMCG market.
Impact: The negative average ROCE of -4.17% indicates systematic capital destruction, with the company failing to generate adequate returns to justify continued investment. This fundamental weakness, combined with elevated employee costs relative to operating profits, suggests structural inefficiencies that require significant operational restructuring.
Employee costs have emerged as a significant burden, rising to ₹8.00 crores in FY22 compared to ₹2.00 crores in FY12, whilst sales have contracted over the same period. This inverse relationship between fixed costs and revenue generation has compressed margins severely. The operating profit before depreciation, interest, and tax (PBDIT) excluding other income turned negative at ₹2.00 crores in FY22, compared to a healthy ₹4.00 crores in FY12.
The Valuation Paradox: Premium Pricing for Subpar Performance
Perhaps most perplexing is Chordia Food's valuation premium despite its poor fundamentals. The stock trades at a trailing twelve-month P/E ratio of 48x, more than 2.5 times the industry average of 19x. This valuation appears entirely disconnected from underlying business performance, with the company classified as "Very Expensive" based on historical and peer comparisons. The Price-to-Book ratio of 1.79x, whilst not extreme, still represents a premium for a business with ROE of just 2.36%.
| Metric | Chordia Food | Industry Average | Assessment |
|---|---|---|---|
| P/E Ratio (TTM) | 48.00x | 19.00x | 152% premium |
| Price to Book | 1.79x | ~1.40x | 28% premium |
| EV/EBITDA | 16.03x | — | Elevated |
| EV/Sales | 7.90x | — | High multiple |
The Enterprise Value to Sales ratio of 7.90x appears particularly stretched for a company with negative operating margins and declining revenues. Market consensus clearly views this valuation as unjustified, with the stock declining 13.60% over the past year whilst the broader market gained 10.41%, resulting in a negative alpha of 24.01 percentage points.
Peer Comparison: Lagging Across Key Metrics
When benchmarked against FMCG sector peers, Chordia Food's underperformance becomes even more apparent. The company's ROE of 2.36% trails significantly behind competitors, with peers like Tyroon Tea Co. delivering 16.26% and Sonalis Consumer posting 10.74%. Despite this inferior profitability, Chordia Food commands one of the highest P/E multiples in its peer group at 48x.
| Company | P/E (TTM) | P/BV | ROE % | Debt to Equity | Market Cap (₹ Cr) |
|---|---|---|---|---|---|
| Chordia Food | 47.70 | 1.79 | 2.36% | -0.08 | 28.00 |
| Kanco Tea | NA (Loss Making) | 0.49 | 6.75% | 0.70 | — |
| Tyroon Tea Co. | NA (Loss Making) | 0.80 | 16.26% | -0.41 | — |
| Sonalis Consumer | 11.20 | 3.57 | 10.74% | 0.01 | — |
| Lake Shore | 58.09 | 1.35 | 0.00% | -0.94 | — |
The peer comparison reveals that Chordia Food is trading at a significant premium despite delivering inferior returns. Sonalis Consumer, for instance, trades at just 11.20x earnings whilst generating an ROE of 10.74%—more than four times higher than Chordia Food's 2.36%. This valuation disconnect suggests that the market has yet to fully price in the company's structural challenges.
Shareholding Pattern: Stable Promoter Base, Zero Institutional Interest
The shareholding pattern reveals a promoter-dominated structure with minimal institutional participation. Promoter holding has remained relatively stable around 72.46% as of December 2025, with marginal sequential increases over recent quarters. However, the complete absence of Foreign Institutional Investors (FIIs), Mutual Funds, Insurance Companies, and other Domestic Institutional Investors (DIIs) speaks volumes about institutional perception of the company's prospects.
| Category | Dec'25 | Sep'25 | Jun'25 | QoQ Change |
|---|---|---|---|---|
| Promoter | 72.46% | 72.43% | 72.35% | +0.03% |
| FII | 0.00% | 0.00% | 0.00% | — |
| Mutual Funds | 0.00% | 0.00% | 0.00% | — |
| Insurance | 0.00% | 0.00% | 0.00% | — |
| Other DII | 0.00% | 0.00% | 0.00% | — |
| Non-Institutional | 27.54% | 27.57% | 27.65% | -0.03% |
The zero institutional holding underscores the investment community's lack of confidence in the company's turnaround prospects. Professional investors typically avoid businesses with persistently negative returns and unclear paths to profitability. On a positive note, there is no promoter pledging, indicating that the promoter group maintains financial stability and isn't forced to leverage their holdings.
Stock Performance: Consistent Underperformance Across All Timeframes
Chordia Food's stock price performance has been dismal across virtually all timeframes, with the company underperforming both the Sensex and its FMCG sector peers. Over the past year, the stock declined 13.60% whilst the Sensex gained 10.41%, resulting in a negative alpha of 24.01 percentage points. The underperformance becomes even more pronounced over longer periods, with the stock down 49.85% over four years compared to the Sensex's gain of 44.85%.
| Period | Stock Return | Sensex Return | Alpha | Assessment |
|---|---|---|---|---|
| 1 Week | +5.53% | +0.50% | +5.03% | Short-term bounce |
| 1 Month | -3.99% | +0.79% | -4.78% | Recent weakness |
| 3 Months | -2.86% | +0.44% | -3.30% | Underperforming |
| 6 Months | -10.23% | +4.51% | -14.74% | Significant lag |
| 1 Year | -13.60% | +10.41% | -24.01% | Severe underperformance |
| 2 Years | -24.60% | +17.66% | -42.26% | Structural decline |
| 3 Years | -18.70% | +38.81% | -57.51% | Massive gap |
The technical picture reinforces the bearish fundamental narrative. The stock is currently in a bearish trend, trading below all key moving averages including the 5-day (₹66.95), 20-day (₹72.84), 50-day (₹73.87), and 100-day (₹77.01) moving averages. The stock's beta of 1.50 indicates higher volatility than the broader market, with a volatility reading of 55.23% classifying it as a high-risk investment with negative returns—the worst possible combination for investors.
Investment Thesis: Multiple Red Flags, Limited Catalysts
The investment thesis for Chordia Food Products is overwhelmingly negative across all key parameters. The company's Mojo Score of just 16 out of 100 places it firmly in "Strong Sell" territory, reflecting the confluence of poor fundamentals, expensive valuation, deteriorating financial trends, and bearish technical momentum.
Key Strengths & Risk Factors
KEY STRENGTHS
- Debt-Free Balance Sheet: Negative net debt to equity of -0.08 indicates the company operates with net cash, eliminating financial leverage risk
- Zero Promoter Pledging: No pledged shares demonstrate promoter financial stability and commitment
- Established Brand Legacy: Over four decades of operations with recognition in West India's pickles segment
- Recent Revenue Growth: Q1 FY23 showed 60.09% YoY revenue growth, indicating some demand recovery
- Stable Promoter Holding: Consistent promoter stake around 72% with gradual increases demonstrates long-term commitment
KEY CONCERNS
- Persistent Losses: Losses in four of last six quarters with FY22 closing at ₹4.00 crore loss
- Negative Average ROCE: -4.17% average ROCE indicates systematic capital destruction over five years
- Collapsing Margins: Operating margin declined from 14.3% (FY12) to -2.5% (FY22)
- Revenue Contraction: 45.66% sales decline over five years from ₹80 crores to ₹60 crores
- Elevated Valuation: P/E of 48x represents 152% premium to industry despite inferior fundamentals
- Zero Institutional Interest: Complete absence of FII, MF, and insurance holdings signals lack of confidence
- Weak ROE: 2.36% average ROE significantly below acceptable thresholds for consumer goods companies
Outlook: What to Watch
POSITIVE CATALYSTS
- Sustained quarterly profitability across multiple quarters
- Operating margin recovery above 5% threshold
- Revenue growth translating to bottom-line improvement
- Cost restructuring initiatives bearing fruit
- Any institutional investor interest or stake building
RED FLAGS
- Continued quarterly losses or margin compression
- Further revenue contraction below ₹60 crores annually
- Employee costs rising faster than revenue growth
- Promoter stake reduction or any pledging activity
- Stock breaking below ₹62.35 (52-week low) support
The Verdict: Avoid This Value Trap
Score: 16/100
For Fresh Investors: Avoid completely. The combination of persistent losses, negative average ROCE, collapsing margins, and expensive valuation creates a perfect storm of investment risks. There are no compelling catalysts to justify entry at current levels, and the 48x P/E multiple for a loss-making business is indefensible.
For Existing Holders: Consider exiting on any technical bounce. The stock's 13.60% decline over the past year understates the severity of fundamental deterioration. With the company destroying capital (negative ROCE) and trading at a significant premium to better-quality peers, the risk-reward equation is heavily skewed against holders. Use any strength towards ₹75-77 levels to reduce exposure.
Fair Value Estimate: ₹45-50 (37-30% downside from current levels), assuming the company can stabilise operations and return to modest profitability. Current valuation of 48x earnings for a business with 2.36% ROE and negative five-year ROCE is unjustifiable by any rational metric.
Rationale: Chordia Food Products exemplifies a classic value trap—a stock appearing cheap on headline metrics but fundamentally impaired. The confluence of persistent losses, structural margin compression, expensive valuation relative to quality, zero institutional interest, and bearish technical momentum creates an overwhelmingly negative investment case. Until the company demonstrates sustained profitability improvement and margin recovery, the stock warrants a wide berth from prudent investors.
Note- ROCE= (EBIT - Other income)/(Capital Employed - Cash - Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions.
