Current Rating Overview
MarketsMOJO currently assigns Faze Three Ltd a 'Sell' rating, reflecting a cautious stance on the stock. This rating was revised on 05 February 2026, when the company’s Mojo Score improved from 26 to 44 points, moving the grade from 'Strong Sell' to 'Sell'. Despite this improvement, the recommendation indicates that investors should remain wary of the stock’s prospects given prevailing fundamentals and market conditions.
How the Stock Looks Today: Key Fundamentals
As of 17 February 2026, Faze Three Ltd remains a microcap player in the Garments & Apparels sector. The company’s financial profile presents a mixed picture, with several areas of concern balanced by some positive technical signals.
Quality Assessment
The quality grade for Faze Three Ltd is classified as average. Over the past five years, the company’s operating profit has grown at a modest annual rate of 7.28%, indicating limited long-term growth momentum. This subdued expansion suggests challenges in scaling operations or improving profitability sustainably.
Valuation Considerations
Currently, the stock is considered expensive based on valuation metrics. The company’s Return on Capital Employed (ROCE) stands at a low 7.6%, while the Enterprise Value to Capital Employed ratio is 2.6. Although the stock trades at a discount relative to its peers’ historical valuations, this valuation does not fully compensate for the company’s weak profitability and growth outlook. Investors should note that despite the stock’s attractive price relative to some peers, the underlying fundamentals do not support a premium valuation.
Financial Trend and Profitability
The financial trend remains negative. The latest quarterly results for December 2025 reveal a decline in profitability, with Profit Before Tax (excluding other income) falling by 23.4% to ₹6.03 crores compared to the previous four-quarter average. Similarly, Profit After Tax dropped by 24.4% to ₹6.40 crores. The half-year ROCE is at a low 9.13%, underscoring the company’s struggles to generate efficient returns on capital. Furthermore, despite the stock delivering a robust 69.95% return over the past year, profits have decreased by 2.3%, highlighting a disconnect between share price performance and underlying earnings.
Technical Outlook
From a technical perspective, the stock exhibits a mildly bullish trend. Recent price movements show positive momentum, with a 1-day gain of 1.20%, a 1-week increase of 7.89%, and a notable 1-month surge of 55.80%. Year-to-date, the stock has appreciated by 43.70%, reflecting strong investor interest despite fundamental weaknesses. This technical strength may offer short-term trading opportunities but does not negate the caution warranted by the company’s financial profile.
Investor Sentiment and Market Position
Faze Three Ltd’s microcap status and limited institutional interest are notable. Domestic mutual funds currently hold no stake in the company, which may indicate a lack of confidence or insufficient research coverage. Given that mutual funds typically conduct thorough due diligence, their absence suggests that the stock may not meet the criteria for inclusion in larger, more stable portfolios. This lack of institutional backing adds to the risk profile for retail investors.
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What the 'Sell' Rating Means for Investors
A 'Sell' rating from MarketsMOJO suggests that investors should consider reducing or avoiding exposure to Faze Three Ltd at current levels. The rating reflects a combination of average quality, expensive valuation, negative financial trends, and only mild technical support. While the stock has shown impressive price gains recently, the underlying fundamentals raise concerns about sustainability and risk.
Investors should be mindful that the company’s profitability is under pressure, and growth remains limited. The valuation does not offer a sufficient margin of safety given these challenges. Additionally, the absence of institutional investors may signal a lack of confidence from professional market participants.
For those holding the stock, it may be prudent to reassess their position in light of the current financial and technical outlook. Prospective investors should carefully weigh the risks before considering entry, as the stock’s recent price appreciation may not be supported by fundamental strength.
Summary
In summary, Faze Three Ltd’s 'Sell' rating as of 05 February 2026, supported by a Mojo Score of 44, reflects a cautious stance driven by average quality, expensive valuation, negative financial trends, and only mild technical bullishness. The latest data as of 17 February 2026 confirms that while the stock has delivered strong returns over the past year, its profitability and growth metrics remain subdued, warranting a conservative approach from investors.
Investors seeking exposure to the Garments & Apparels sector may wish to explore alternatives with stronger fundamentals and more favourable valuations. Meanwhile, monitoring the company’s quarterly results and market developments will be essential to reassess the outlook going forward.
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