Faze Three Downgraded to 'Sell' by MarketsMOJO, But Shows Strong Long-Term Growth and Market Outperformance

Faze Three, a smallcap textile company, has recently been downgraded to a 'Sell' by MarketsMOJO on August 19, 2024. This decision was based on the company's negative results in June 2024, with a decrease of 37.7% in its PAT(Q) at Rs 7.26 crore. Additionally, its ROCE(HY) has also fallen to its lowest at 13.39%, and its operating profit to interest (Q) is at its lowest at 5.46 times.
Despite being a smallcap company, Faze Three has a low debt to EBITDA ratio of 1.29 times, indicating a strong ability to service debt. However, domestic mutual funds hold only 0.66% of the company, which could suggest that they are not comfortable with the company's current price or business.

On a positive note, Faze Three has shown healthy long-term growth with an annual rate of 36.71% in its operating profit. The stock is also technically in a mildly bullish range, with multiple factors such as MACD, KST, and DOW indicating a bullish trend.

With a ROCE of 13.5, the stock is fairly valued with a 2.7 enterprise value to capital employed. It is also currently trading at a discount compared to its average historical valuations. However, in the past year, while the stock has generated a return of 38.31%, its profits have fallen by 26%.

Despite its recent downgrade, Faze Three has a track record of market-beating performance in the long term. In the last year, it has generated a return of 38.31% and has outperformed BSE 500 in the last 3 years, 1 year, and 3 months. Investors should carefully consider these factors before making any decisions regarding Faze Three's stock.