Faze Three Limited

Consumer Cyclical — Textile Manufacturing · NSE

₹415.30+₹9.20 (+2.27%)

DalalBaazaar Score

42 / 100

🟡 Moderate

Verdict

CAUTION

Risk

High

Driven by negative free cash flow, micro-cap size, which brings thin liquidity, falling profits.

In simple words: The business is earning a fairly low return on the money invested in it, though profits are falling even as sales grow. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:49 pm

Understanding the Business

Company site ↗

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

What does this company do?

Faze Three Limited manufactures and exports home textile products and auto fabrics in India, the United States, the United Kingdom, Europe, and internationally.

IndustryTextile Manufacturing

SectorConsumer Cyclical

Employees2,959

Annual revenue₹860 Cr

How does it make money?

Turns over ₹860 Cr a year. Of every ₹100 of sales, about ₹4 reaches shareholders as profit, with ₹10 left at the operating level before interest, tax and depreciation. Each of its 2,959 employees supports ₹29.0 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹29.0 lakh

Who are its competitors?

The closest listed comparisons in its industry are MARUTI SUZUKI INDIA LTD., TITAN COMPANY LIMITED, TRENT LTD, AVENUE SUPERMARTS LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Little sign of one

Returns on capital of 12.2% 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.

Peer median ROE25.9%

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved +62% while net margin moved -64% 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+62%

Margin effect-64%

DalalBaazaar Score

42/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ ROE of 7.4% is weak
✗ ROE has fallen by 10.0 points over the period

Quality vs. Valuation

Company Quality

41/ 100

Weak

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

Valuation

52/ 100

Fair

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

33.2x

3Y Median

23.4x

40 monthly readings · mean 24.3x · range 15.0x–35.8x

Sector Median

69.2x

median of 4 sector peers

⚠️Current valuation is approximately 42% above its 3y median of 23.4x. Paying more than usual needs a reason — faster growth, a better balance sheet, or a re-rating you believe in.

🟢Against its sector it trades 52% below the peer median of 69.2x.

vs. its own history

Expensive

23.4x median over 40 months · +42%

vs. sector peers

Cheap

69.2x median of 4 peers · -52%

vs. generic bands

Fair

15x–35x

EV/EBITDA

15.2x

PEG

—

What's Good / What's Bad

🟢 What's Going Well1

Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 17.4% to 7.4% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 24.3% to 12.2% — often a sign of competition or overexpansion.

Red Flags

6 items require attention · 4 high · 2 watch

🔴Debt has risen sharplyFinancial
Total debt is up 58% over 3 years, from ₹174 Cr to ₹275 Cr.
🔴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.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 8.8 points, from 18.6% to 9.7%.
🔴Inventory building faster than salesFinancial
Inventory up 134% against revenue up 62% — stock may not be moving.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from 4.6x to 3.2x.
🟡Profit is decliningFinancial
Net profit is down 42% over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Cheaper than its peers
It trades 52% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
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?

Margins are being competed away
EBITDA margin has fallen from 18.6% to 9.7%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
The debt load needs earnings to hold up
Debt is 3.3x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
The price already assumes success
The stock trades 42% above its own median multiple. At this level the business has to deliver just to stand still, and a stumble is repriced twice — lower earnings on a lower multiple.
Returns on shareholder capital are falling
ROE has dropped from 17.4% to 7.4%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.
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.

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

1Revenue growth stays above 13% a year✓ 17.4% CAGR
Latest reported year was 8.2%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 8%✓ 9.7%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA falls below 3x✗ 3.3x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
4Free cash flow remains positive✗ -₹63 Cr
Profit that never becomes cash eventually stops being profit.
5Interest cover stays above 3x✓ 3.2x
How much operating profit can fall before interest stops being comfortably covered.

Investment Checklist

5 / 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

1 good · 7 neutral · 3 weak

Market Cap

₹1,008 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

33.2x

Fair

Fairly valued against the generic band

P/B Ratio

2.23x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹12.52

Profitable

Profitable on a per-share basis

ROE

7.4%

Weak

Weak capital efficiency

ROCE

12.2%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.61x

Moderate

Moderate leverage

Revenue Growth (YoY)

8.2%

Modest

Modest growth

Profit Growth (YoY)

-24.6%

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

-₹63 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

5.8%

Average

Average margins

Net Margin

3.2%

Average

Average bottom-line conversion

Current Ratio

1.26

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.35

Defensive

Steadier than the market

52W Range Position

28%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

425.5 / 469.6

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

45.8

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹531 Cr	₹539 Cr	₹654 Cr	₹860 Cr	+17.4%
EBITDA	₹99 Cr	₹94 Cr	₹82 Cr	₹84 Cr	-5.3%
EBITDA Margin	18.6%	17.4%	12.6%	9.7%	—
PAT (Net Profit)	₹58 Cr	₹47 Cr	₹41 Cr	₹34 Cr	-16.8%
EPS	₹23.97	₹19.16	₹16.72	₹13.8	-16.8%
ROE	17.4%	12.2%	9.7%	7.4%	—
ROCE	24.3%	18.5%	15.4%	12.2%	—
Total Debt	₹174 Cr	₹170 Cr	₹192 Cr	₹275 Cr	+16.5%
Free Cash Flow	₹55 Cr	-₹23 Cr	-₹80 Cr	-₹63 Cr	—

🟢 Revenue has grown at 17.4% a year over 3 years.

🔴 EBITDA has shrunk at 5.3% a year over 3 years.

🔴 EBITDA Margin has fallen from 18.6% to 9.7% over 3 years (-8.8 pts).

🔴 PAT (Net Profit) has shrunk at 16.8% a year over 3 years.

🔴 EPS has shrunk at 16.8% a year over 3 years.

🔴 ROE has fallen from 17.4% to 7.4% over 3 years (-10.0 pts).

🔴 ROCE has fallen from 24.3% to 12.2% over 3 years (-12.1 pts).

🔴 Total Debt has grown at 16.5% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹55 Cr to -₹63 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹819 Cr

Total Liabilities

₹367 Cr

Cash & Equivalents

₹13 Cr

Operating Cash Flow

₹58 Cr

Capex

-₹121 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

82.4%

Peer Comparison

Company	P/E	ROE
MARUTI SUZUKI INDIA LTD.	25.2x	13.4%
TITAN COMPANY LIMITED	68.5x	36.7%
TRENT LTD	87.2x	25.9%
AVENUE SUPERMARTS LIMITED	69.9x	12.7%

Recent News

1 negative5 general

The Returns At Faze Three (NSE:FAZE3Q) Aren't Growing

Simply Wall Street, 04 Feb

Faze Three President outlines AI-driven MSME growth in D&B feature

scanx.trade, 03 Oct

Faze Three consolidated net profit declines 24.51% in the June 2026 quarter

Business Standard, 12 AugResults

🔴Potentially negativeReported deterioration, which feeds the growth and margin inputs on this page directly.

Compare with AUNDE FAZE THREE

Equitymaster, 08 Oct

Faze Three: Best Stock in Its Sector? Key Metrics

Univest, 25 Sept

There's Reason For Concern Over Faze Three Limited's (NSE:FAZE3Q) Massive 31% Price Jump

Simply Wall Street, 05 Feb

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

MiddlingFinancial Health · Risk

WeakBusiness Quality · Growth · Profitability · Valuation

Points for each in the Score ↑

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. 4 high-severity red flags sit above this conclusion and should be read first.

2 of 5 tripwires tripped — Debt / EBITDA falls below 3x; Free cash flow remains positive · see Key things to watch ↑