- 05 Aug 2022
- ICICIdirect Research
FAZE THREE REPORTS RESILIENT FINANCIAL PERFORMANCE IN CHALLENGING SCENARIO
FAZE3Q - 431 Change: -4.25 (-0.98 %)News: Faze Three reported steady operational performance with revenue on a favourable base increasing 50% YoY to Rs 147 crore (down 5% QoQ, three year CAGR: ) in a seasonally weak quarter. Judicious price hikes and improved product mix resulted in company maintaining its gross margins at 55% (up 158 bps YoY). On account of positive operating leverage, EBITDA margins improved 250 bps YoY to 16%. Absolute EBITDA grew 77% YoY (3% QoQ) to Rs 23.4 crore. Tracking steady operational performance, PAT grew 60% YoY (down 7% QoQ) to Rs 14.6 crore.
View: The management has indicated that despite slowdown in key export geographies (US/UK: 90% of sales) there is enough visibility for moderate growth as a base case in FY23. Orders are largely unaffected despite potentially challenging environment evolving in last 4-5 months globally. Company’s products largely positioned in the band at $10-25 per piece / per set band for sale by retailers which empirically have not seen significant reduction in demand in tough times. . Company specialises in polyester/cotton based home textile products such as bathmats and rugs which are mainly dominated by Chinese exports (unlike sheets & towels wherein India has a significant share in US markets). In a bid to capture long term growth opportunities the company has embarked on brownfield capacity expansion and outlined capex worth Rs 80 crore, which will be funded mainly through internal accruals (potential revenues 2x of current annual run-rate).
Impact: Positive.