How has been the historical performance of Faze Three?

Dec 02 2025 10:54 PM IST

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Faze Three has shown steady growth in net sales, reaching 689.94 Cr in March 2025, but faced declines in profitability metrics, with profit before tax decreasing to 52.65 Cr and earnings per share dropping to 16.72. Despite increased total assets and operating income, rising expenditures and reduced cash flow indicate potential challenges in managing costs and maintaining profit margins.

Revenue and Profit Growth

Over the seven-year period ending March 2025, Faze Three’s net sales have shown a commendable upward trend, climbing from ₹268.55 crores in 2019 to ₹689.94 crores in 2025. This represents a compound growth trajectory reflecting the company’s expanding market presence and operational scale. The total operating income mirrors this growth, with no other operating income reported, indicating core business strength.

Operating profit before other income (PBDIT) peaked in fiscal 2023 at nearly ₹94.35 crores before moderating slightly to ₹80.43 crores in 2025. Including other income, operating profit remained robust, though it experienced a mild decline from ₹99.93 crores in 2023 to ₹92.23 crores in 2025. Despite this, the company maintained a healthy operating profit margin, which, while contracting from a high of 16.9% in 2023 to 11.66% in 2025, still reflects operational efficiency in a competitive environment.

Cost Structure and Margins

Raw material costs have risen in line with sales, reaching ₹377.83 crores in 2025 from ₹118.04 crores in 2019, indicating increased production volume and input costs. Employee expenses also increased steadily, reflecting workforce expansion and wage inflation. Other expenses have nearly doubled since 2019, signalling higher overheads or investment in business activities. Despite these rising costs, the company has managed to sustain positive gross and operating margins, though with some margin pressure in recent years.

Profitability and Earnings

Profit before tax (PBT) has more than doubled from ₹17.82 crores in 2019 to ₹52.65 crores in 2025, despite some fluctuations. Profit after tax (PAT) followed a similar pattern, rising from ₹15.05 crores to ₹40.66 crores over the same period. Earnings per share (EPS) peaked at ₹23.97 in 2023 before easing to ₹16.72 in 2025, reflecting the profit trend. The PAT margin, however, has contracted from over 10% in 2023 to 5.89% in 2025, indicating margin pressures possibly due to rising costs or competitive pricing.

Balance Sheet Strength and Capital Structure

Faze Three’s shareholder funds have grown consistently, reaching ₹420.02 crores in 2025 from ₹226.13 crores in 2021, supported by rising reserves. The company has successfully reduced long-term borrowings to zero by 2025, though short-term borrowings have increased to ₹180.28 crores, reflecting a shift in debt profile. Total liabilities have expanded in line with asset growth, with total assets rising from ₹354.53 crores in 2021 to ₹686.45 crores in 2025. The book value per share has more than doubled since 2021, signalling enhanced net asset value for shareholders.

Cash Flow and Liquidity

Operating cash flow has been variable, with a peak of ₹110 crores in 2023 but a decline to ₹12 crores in 2025. Investing activities consistently show cash outflows, reflecting ongoing capital expenditure and expansion efforts. Financing cash flows have fluctuated, with a modest inflow in 2025 after prior years of outflows. The company’s closing cash and cash equivalents have decreased to ₹8 crores in 2025 from ₹61 crores in 2023, indicating tighter liquidity but still maintaining a positive cash position.

Summary and Outlook

Faze Three’s historical performance reveals a company that has steadily expanded its revenue base and profitability over the past several years. While recent years have seen some margin compression and tighter cash flows, the overall financial health remains solid with a strong equity base and manageable debt levels. The company’s ability to grow shareholder value, as evidenced by rising book value per share, underscores its resilience and operational effectiveness in the garments and apparels sector. Investors should monitor margin trends and working capital management closely as the company navigates competitive pressures and cost fluctuations.

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