Faze Three Shares Jump 5% After Revenue Reaches ₹933 Cr Despite Weak FY26 Profit

Synopsis:- Reporting its highest-ever annual revenue of Rs.933 crore  up 33 percent year-on-year  Faze Three Limited delivered a paradoxical FY2026: flat EBITDA, a 17 percent drop in consolidated PAT, and yet a record-breaking Q4 that management says signals what FY27 could look like as China+1 tailwinds, trade deal clarity, and an ending capex cycle converge.

Shares of a leading home textiles exporter and manufacturer came into focus after the company filed its audited financial results for the quarter and full year ended March 31, 2026, on May 25, 2026. The results revealed a company navigating a difficult transition year with heavy investment, forex headwinds, and tariff-related disruption  while making a case that the worst is now behind it.

With a market capitalization of Rs. 1,232.12 crore, the shares of Faze Three Limited were trading at Rs. 506.65 per share, up 4.99 percent from its previous close of Rs.482.55. It is trading at a P/E of 34.96.

On a consolidated basis, total income for FY2026 rose to Rs.932.8 crore from Rs.701.7 crore in FY2025, a jump of nearly 33 percent. The six-year revenue CAGR stands at 20 percent, with the company having grown from a Rs.306 crore base in FY2020 to its current scale.

The profit picture, however, is more complicated. EBITDA for FY2026 came in at Rs. 92.27 crore  essentially flat against Rs. 92.23 crore in FY2025, despite revenue growing by over Rs. 231 crore. EBITDA margin compressed from 13.14 percent to 9.89 percent. PAT fell to Rs. 33.6 crore from Rs.40.7 crore, a decline of 17 percent, and EPS dropped to Rs. 13.8 from Rs. 16.7  the third consecutive year of EPS decline after peaking at Rs.24 in FY2023.

Three factors account for the margin squeeze. A Rs. 11.50 crore realised loss on USD-INR forward contracts hurt other expenses. Finance costs rose to Rs. 19.5 crore from Rs.14.6 crore as debt levels climbed, net debt-to-EBITDA moved to 2.33x from 1.74x, and interest coverage fell to 3.16x from 4.62x. Additionally, tariff-related disruption from the US affected business flow from April 2025 through February 2026, suppressing revenue realisation during much of the year.

Q4 Recovery and What It Signals

The March quarter told a meaningfully different story. Consolidated revenue of Rs.280 crore and EBITDA of Rs. 37 crore were both the highest-ever quarterly figures in the company’s history. EBITDA margin bounced to 13.25 percent in Q4FY26 from a depressed 9.15 percent in Q3FY26  a 410 basis point sequential recovery driven by the unwinding of tariff impacts post mid-February 2026, improved USD/INR rates, and improving trade deal sentiment. PAT for Q4 came in at Rs. 19.6 crore, up 13 percent from Rs. 17.4 crore in Q4FY25.

The company’s own framing is that Q4FY26 represents the normalised run-rate, not the full-year average. Management expects EBITDA margins to continue improving as operating leverage kicks in at higher revenue levels.

What Happened And What Lies Ahead

The strategic argument Faze Three is making to investors rests on two pillars: a capacity build-out that is nearly complete, and a structural shift in global sourcing away from China that is still in its early stages.

The company currently operates eight factory locations  two in Silvassa, one in Vapi, four in Panipat, and one in Aurangabad through its subsidiary Mats & More  with an installed revenue capacity of over Rs. 1,650 crore. Average utilisation across this base is around 55 percent. On those numbers, revenue can roughly double without material new investment. 

The capex cycle, which absorbed over Rs. 363 crore over six years, is expected to conclude in FY27, after which management estimates 40 to 50 percent of operating cash flow will be available for debt reduction, working capital optimisation, or shareholder returns. Planned capex for FY27 is approximately Rs.75 crore, focused on new product capabilities expected to be operational by Q1FY28.

On the demand side, the CNY/INR exchange rate has moved from 11.65 to 14.10, a 21 percent shift in thirteen months, eroding China’s manufacturing cost advantage in home textiles. A 10 percent tariff differential compounds this. The company counts Walmart, Target, TJMaxx, Costco, Williams Sonoma, Pottery Barn, JYSK, and Sainsbury’s among its top fifteen customers, most with over twenty years of purchasing history. Customer appetite, the presentation notes, exceeds current supply by at least tenfold.

There are near-term headwinds management has flagged. Input costs of cotton, polyester, chemicals, fuel, and logistics  have risen 25 to 35 percent from pre-war levels due to the US-Iran conflict, only partially offset by USD/INR realisation. The company says it is actively seeking reprice and upcharge conversations with customers, and that business momentum remains broadly intact.

Business Overview

Faze Three Limited, incorporated in 1985 and listed since 1995, manufactures and exports home textile products including bathmats, rugs, blankets, throws, and cushions across cotton and MMF categories. Over 90 percent of revenue is from direct exports to large retailers in the US, UK, and Europe, with the top twelve customers contributing roughly 80 percent of sales.

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.

The post Faze Three Shares Jump 5% After Revenue Reaches ₹933 Cr Despite Weak FY26 Profit appeared first on Trade Brains.