Credit Rating

July 09, 2026 BSE Limited National Stock Exchange of India Limited Department of Corporate Services, Listing Compliance Department, P. J. Towers, Dalal Street, Exchange Plaza, Plot No. C/ 1, G Block, Mumbai – 400 001. Bandra Kurla Complex, Scrip Code: 530079 Bandra (E), Mumbai – 400 051. Symbol: FAZE3Q Dear Sir/Ma’am, Sub: Intimation regarding reaffirmation of the Credit Rating Ref: Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 We hereby inform you that CARE Ratings Ltd. has reaffirmed the Company’s Long-term & Short-term Bank Facilities aggregating to Rs. 280.00 crores as CARE A; Stable & Care A1, respectively. A detailed rationale for rating and rating action is also enclosed herewith for the kind information and record of the exchange and the stakeholders. Thanking you, Yours Sincerely, For Faze Three Limited Akram Sati Company Secretary & Compliance Officer M. No.: A50020 Encl: a/a FAZE THREE LIMITED (CIN: L99999DN1985PLC000197) Regd. Office: Survey 380/1, Khanvel Silvassa Road, Dapada, Silvassa – 396 230, UT of D&NH Corporate Office: 63, 6th Floor, Wing C, Mittal Court, Nariman Point, Mumbai - 400021. Tel. : 91 (22) 43514444, 66604600 * Fax : 91 (22) 24936811 * E-mail : cs@fazethree.com * Website : www.fazethree.com CareEdge Press Release RATINGS Faze Three Limited July 08, 2026 Amount (₹ Facilities/Instruments Rating1 Rating Action crore) Long Term Bank Facilities 40.00 CARE A; Stable Assigned 240.00 Long Term / Short Term Bank CARE A; Stable Reaffirmed and removed from Rating Watch with (Enhanced from Facilities / CARE A1 Negative Implications; Stable outlook assigned 210.00) Details of instruments/facilities in Annexure-1. The list of facilities / instruments falling under the purview of various financial sector regulators (FSRs), along with the names of respective FSRs has been disclosed under Annexure-7. Rationale and key rating drivers Reaffirmation of ratings and removal of the Rating Watch with Negative Implications considers the significant improvement in Faze Three Limited’s (FTL’s) scale of operations with ~34% y-o-y growth in revenue to ₹923 crore in FY26 (PY: ₹690 crore), despite global geopolitical uncertainties and challenges around imposition of trade tariffs for seven months in FY26, supported by significant growth in sales volume across key product categories and addition of new products, while maintaining adequate capital structure and coverage metrics. CARE Ratings Limited’s (CareEdge Ratings’) expects sustenance of performance over the coming years aided by long-standing relationships with customers. CareEdge Ratings had placed FTL’s ratings under Rating Watch with Negative Implications in September 2025 owing to the uncertainty around the impact of the additional 25% tariff levied by the US Government on import of textiles from India from August 27, 2025 on the company’s revenue and profitability given that FTL derives over 50% of its revenue from exports to the US. While FTL’s revenue grew in FY26, its profit before interest, lease rent, depreciation and taxation (PBILDT) margin moderated by ~300 bps y-o-y to 10.12% in FY26 (FY25: 13.03%) with the company absorbing part of the incremental tariffs and other operational costs owing to the disruption. With removal of the US tariffs, FTL’s profitability has recovered in Q4FY26 and is expected to improve further, despite ongoing headwinds of a steep rise in fuel prices and supply chain bottlenecks owing to the West Asia conflict. CareEdge Ratings also notes that the company has incurred capex of over ₹300 crore in the last four years towards addition of capacity for new and existing products, funded mainly through internal accruals. The company also has received approval from the Government of India, ministry of Textiles for production- linked incentive manmade fibres (PLI MMF) on July 01, 2026. Going forward, the company’s ability to ramp-up its capacity utilisation leading to margin expansion and improvement in debt coverage metrics remains a key monitorable. Ratings continue to derive strength from the company’s established track record in the home textile industry, diversified product portfolio across floor coverings and top-of-the-bed products and relationships with reputed customers with a track record of repeat business. Ratings also derive strength from FTL’s adequate capital structure, as reflected by its overall gearing and total outside liabilities to tangible net worth (TOL/TNW) at 0.69x and 0.89x, respectively, in FY26, despite incremental borrowings to fund working capital, and healthy debt coverage metrics, despite moderation in FY26 owing to pressure on profitability due to external factors. However, ratings remain constrained by FTL's high geographical concentration risk, with over 60% of revenue derived from exports to the US in the last five years, working capital intensive operations and exposure to fluctuations in raw material prices and foreign exchange rates, which could impact profitability and cash flows. Rating sensitivities: Factors likely to lead to rating actions Positive factors • Sustained increase in scale of operations with PBILDT margin above 15% translating to healthy cash flow from operations. Negative factors • Significantly declining revenue or profitability impacting the debt coverage indicators and liquidity on a sustained basis. • Large unanticipated debt-funded capex or acquisition resulting in deteriorating capital structure. • Deteriorating working capital cycle leading to increasing total debt/PBILDT above 2.00x. Analytical approach: Consolidated While arriving at ratings, CareEdge Ratings has considered the consolidated financial risk profile of FTL, and its subsidiaries, owing to the significant managerial, operational, and financial linkages between them, as detailed in Annexure-6. 1Complete definition of ratings assigned are available at www.careratings.com and other CARE Ratings Limited’s publications. 1 CARE Ratings Ltd. CareEdge Press Release RATINGS Outlook: Stable The Stable outlook CareEdge Ratings’ expectations that FTL will maintain adequate debt coverage metrics in the medium term while benefitting from its established industry presence and long-standing customer relationships. Detailed description of key rating drivers: Key strengths Comfortable capital structure and debt coverage metrics FTL's capital structure continues to remain comfortable, supported by its healthy net worth base and sustained accruals, translating into overall gearing remained and TOL/TNW at 0.69x and 0.89x, respectively, as on March 31, 2026 (PY: 0.52x and 0.84x, respectively), despite increase in borrowings to fund incremental working capital requirements. Its debt coverage metrics also remain adequate, despite some moderation in FY26 due to pressure on profitability owing to the heightened tariffs levied on imports from India by the US Government, with PBILDT interest cover at 3.08x in FY26 (PY: 3.74x). CareEdge Ratings notes that while FTL’s total debt/PBILDT deteriorated to 2.95x in FY26, above the negative sensitivity threshold of 2.0x, largely owing to lower profitability on partial absorption of the incremental US tariffs levied on imports from India, which is expected to normalise in the coming quarters and remains a monitorable. Going forward, with no major debt-funded capex plans and expectations of growth in cash accruals from operations, the company is expected to maintain a comfortable financial risk profile. Established relationships with reputed clientele The company’s major customers include global big-box retailers in the US, the UK, and Europe such as Walmart, Target, TJMaxx and Action, among others. The company benefits from its established and long-term relationships with key customers, which are expected to result in high repeat orders and increasing wallet share, supporting revenue visibility. FTL’s revenue is fairly diversified across customers with no single customer accountin [Showing first 8,000 characters — download PDF for full document]