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  • 23 May 2022
  • ICICIdirect Research

FAZE THREE REPORTS HIGHEST EVER QUARTERLY SALES IN Q4FY22

FAZE3Q - 428 Change: -16.60 (-3.74 %)

News: Faze Three continued to report strengthened financial perfromnance with the company clocking in highest ever quarterly revenue in Q4FY22. Sales on a high base grew 17% on a QoQ basis to Rs. 155.3 crore (up 43% YoY). Gross margins remained flattish at 56.5% driven by improved product mix and judicious price hikes taken to combat RM inflation. Owing to higher other expenses (up 39% QoQ), EBITDA margins declined 270 bps QoQ to 15% but still remained above its historical average margins of 10-12%. Lower finance cost and taxation rate resulted in PAT growth of 25% QoQ (83% YoY) to Rs. 15.8 crore

Views: Despite various challenges, FY22 was a landmark year for it as it reported its highest ever revenues (Rs. 500 crore) and PAT (Rs. 51 crore). The utilisation rates got enhanced significantly from 65% to ~95% in FY22. It generated heathy RoCE of ~16% in FY22. The company indicated there was huge unfulfilled demand within the existing customer base and it could not service the same owing to capacity constraints. While demand for its core product portfolio (bathmats & rugs) remained heathy, robust demand was also seen in top of the bed product categories and allied home textile products. 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 run rate)

Impact: Positive