Thread by @investage_

- A company which has a huge industry and opportunity size!

- Already a #MultiBagger stock! 💰

- Ace investor Ashish Kacholia increased stake in this CO in Q3 FY22! 📈

𝗙𝗔𝗭𝗘 𝗧𝗛𝗥𝗘𝗘
Cmp: 331

[A thread - Let’s analyse!] 🧵🧵🧵
#sharemarket #investing #nifty50

We’ll be covering:

- About the company
- Revenue breakup and clientele
- Ongoing Capex
- Industry Structure
- Brief Financial Figures
- Our Rationale

Interested to read about this multibagger? Let’s go! 👇🏻✅

Faze three ltd is a Textile based Company Engaged in manufacturing of Technical & Home Textiles.

The company directly Exports to Large Retailers in USA, UK & EUR region & derives over 90% of its Revenue from Exports. 🛌

The company has 8 factories spread across the country in states such as Haryana, MH & Gujurat.

Revenue Breakup (country wise)

USA:- 60%
UK/EUR:- 30%
ROW:- 10%

The company has an esteemed clientale & is a regular supplier to most of the top retail chains in the U.S. ✅

Esteemed retail clientale: ⬇️

1. Walmart
2. Costco
3. Dollar
4. Target
5. Kohl’s
6. M&S
7. JC penney
8. Bed,Bath & Beyond
9. ASDA
10. Calvin klein

& many more big retailers..

Ongoing Capex

1. All of the Capex is being carried out through internal accruals

2. A huge capex for under Top of Bed & Blankets segment (Nov 21 to Sep 22) is underway to increase capacity to 3x of existing capacity on existing land(brownfield). Overall investment INR 20 Crs.💰

3. The company has commenced expansion at Panipat, Handloom Home Textiles division to have 3x capacity by May 2023. Overall Investment INR 35 Crs.

4. The company has made an Investment of ₹ 12 cr in its subsidiary [Mats and More Pvt Limited] to cater to a new category under floor coverings being patio mats including outdoors to cater to the existing customers based on business visibility. 📈

The subsidiary would have a revenue potential of at-least USD 10 Mln in phase 1 within 3-4 years.

Industry structure:

1. India is a leading supplier of Sheets & Towels under the Home Textiles Segment (Bed & Bath) given the availability of Cotton
Floor coverings (Bathmats, Rugs, Outdoor, performance textiles) being predominantly polyester based and technical in nature .. 👇🏻

were largely exported out of China until 2018/2019 & estimated exports are said to be at least 20 times of India Post 2019.

2. Tailwinds for the Industry include Tariffs imposed on China textiles exports, rising labour & power costs, pollution crackdowns, diminishing incentives, because of which Chinese exports have become relatively expensive.

This is positive ✅✅

3. In 2020/21 owing to COVID Pandemic, supply chain disruptions & strong momentum towards “China Plus One” has led to demand shift from Top Organised Retailers across the Globe towards India, being a natural ally & having reliably delivered over the years.

4. Owing to Domestic challenges & demand scenario, many known contemporary suppliers out of China in range of USD 150 Mln – 250 Mln annual revenue have downsized / diversified out of business. 🔻🔻

5. Customer preference across USA, UK & EUR has shifted to “other than Made in China” as seen from trends.

6. Incumbent suppliers in 🇮🇳 have huge demand tailwind from above factors. Effective execution by brownfield / green field expansion is the key to tap demand momentum.

7. PLI for MMF will establish a robust supply chain of MMF, esp. for Polyester based raw materials to make company’s final products more competitive globally.

Let’s see the brief financial numbers 👇🏻

P/E RATIO – 14.3
INDUSTRY P/E RATIO – 14.3
 
EVEBITDA – 9.65
 
SALES GROWTH 5 YEARS – 15.7%
 
ASSET TURNOVER RATIO – 1.17
 
DEBT TO EQUITY – 0.59
 
ENTERPRISE VALUE – 913 Cr
 
EV/EBIT – 10.9

Rationale:
Why it seems bullish? 🐂🐂

Faze three ltd happens to be in a sweet spot given the huge Industry & opportunity size in home textiles & its strong position in rubber doormats, the company did most of its capex when the Industry was not doing good (2017-20). ✅

Rubber doormats industry is a fragmented industry & most of the production is done out of 🇮🇳.

The CO is well positioned because it offers many prod. (Handloom, Technical & Rubber backed floorcoverings under one roof). Most of the competitors specialize in only 1 or 2 products.

Lastly all of the company’s products are only made under orders & are in the range of $10-25 which results in their demand not being much impacted due to inflation and other factors. ✅

What are your thoughts on the same?
Are you tracking FAZE THREE LTD?

Do let us know your views!
@tushar9590 @DesaiAmeet @darshitpatel84 @oldschoolinvest

Disclaimer: Not invested.
Investage Capital is not SEBI registered. The analysis shared in this thread is for educational & knowledge sharing purposes only. This is not a buy/sell recommendation of any form. Kindly consult with your financial advisor before taking any action.