CARE lifts negative watch on Faze Three as revenue crosses ₹923 cr
The rating agency reaffirmed bank facilities at CARE A/A1, citing 34% growth, tariff resolution and PLI approval.
— 3 earlier stories on Faze Three Ltd. →What's new
- CARE reaffirmed Faze Three's bank facilities of ₹280 cr at CARE A / CARE A1 and removed the rating from watch negative.
- Revenue grew 34% to ₹923 cr in FY26; US tariff uncertainty resolved.
- PLI scheme for technical textiles was approved, aiding credit profile.
Why this matters
The removal of the negative watch signals that CARE sees the tariff shock as contained and the business momentum intact. Still, the rating is a reaffirmation, not an upgrade, and margins remain compressed after absorbing tariff costs. For a micro-cap trading at 45x earnings, the credit improvement is positive but won't shift valuation by itself.
What we're watching
- How margins evolve — Q4 saw recovery after tariff withdrawal, but full-year profit still fell 30%.
- Disbursement details of the PLI incentive and its impact on margins.
- Any further trade policy shifts from the US that could undo the tariff resolution.
The full read
Faze Three just got its credit rating cleaned up. CARE reaffirmed its ₹280 crore bank facilities at CARE A / CARE A1 and yanked the negative watch that had been in place since September. The trigger for the positive change: revenue hit ₹923 crore in FY26, up 34%, and the US tariff cloud that had hung over the company lifted. The PLI approval for technical textiles adds a tailwind. Yet this is a reaffirmation, not an upgrade — and the rating was never in doubt at the investment-grade level. The real story is that margins were squeezed enough to drop net profit 30% in FY26, despite the top-line surge. With a trailing P/E of 45x, equity investors are already pricing in recovery. The credit move validates that recovery; it doesn't accelerate it.
Questions answered
- What does the reaffirmation at CARE A / A1 mean for the company?
- It means CARE considers Faze Three's credit risk low and stable. The removal of the negative watch indicates the tariff risk that triggered the watch has receded, so borrowing costs and access to bank funding should remain favourable.
- Why was the rating placed on watch negative in September 2025?
- CARE placed it on watch negative due to the impact of additional US tariffs on Indian imports. The uncertainty around trade policy threatened the company's export-led revenue and profitability.
- How has the tariff issue been resolved?
- The US withdrew the additional tariffs, and Faze Three's profitability recovered in the fourth quarter of FY26. The company also absorbed some tariff costs during the period, compressing margins temporarily.
- What is the scale of Faze Three's bank facilities covered by this rating?
- The rated bank facilities aggregate ₹280 crore. This covers the company's primary working capital and term loan lines.
- How does the PLI approval fit into the credit story?
- The PLI scheme for technical textiles provides incentives that can boost profitability. The approval came after the rating watch removal and should support the company's competitive position in value-added fabrics.
Faze Three Ltd.
Latest quarter · Mar 2026
Strength & growth
Story so far
All notes on FAZE3Q →- 9 Jul 2026 · 12:28 PM IST CARE lifts negative watch on Faze Three as revenue crosses ₹923 cr
- 9d ago Faze Three lands PLI approval for MMF fabrics, technical textiles
- 49d ago Faze Three profit drops 30% despite 31% revenue growth
- 49d ago Faze Three reports 30% revenue growth but profit shrinks by nearly 30%