Faze Three Q2 FY27 Results (NSE: FAZE3Q)
Signal: Loss reversed
The read
The operating inflection is real but not yet high quality: consolidated EBITDA margin rebounded to 13.45% from 2.69% YoY and 5.84% in Q1FY27, while revenue accelerated to +27.8% YoY; however, raw-material cost grew 33.8% against revenue growth of 27.8%, gross margin compressed 270bps, finance cost rose 26.8%, and H1 operating cash flow fell to ₹15.83 crore against ₹94.43 crore of capex.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹264.58 Cr | +27.8% | +15.3% |
| EBIT | ₹26.75 Cr | N/M from loss | |
| Net profit | ₹15.46 Cr | N/M from -₹5.20 Cr | |
| EPS | ₹6.37 | N/M from loss | |
| EBIT margin | 13.45% |
P&L walk
Revenue accelerated to ₹264.58 crore, +27.8% YoY and +15.3% QoQ, while EBITDA margin recovered to 13.45% from 2.69% YoY; however, raw-material cost rose 33.8% YoY versus revenue growth of 27.8%, leaving gross-margin pressure and making the recovery dependent on inventory movements.
Segments
The group outperformed the parent: consolidated Q2 revenue was ₹264.58 crore versus standalone ₹247.34 crore and consolidated PAT was ₹15.46 crore versus ₹11.74 crore; one subsidiary reported a ₹0.01 crore quarterly loss, so the gap reflects other group contributions rather than that subsidiary.
Key positives
- Consolidated revenue reached ₹264.58 crore, +27.8% YoY and +15.3% QoQ, reversing the Q1FY27 slowdown of ₹229.39 crore.
- EBITDA margin recovered to 13.45% from 2.69% YoY and 5.84% in Q1FY27, with employee plus other expenses up only 3.3% YoY versus 27.8% revenue growth.
- PAT turned positive at ₹15.46 crore from a ₹5.20 crore YoY loss, with no exceptional items reported.
- PPE plus CWIP increased to ₹465.67 crore from ₹365.93 crore in March 2026, while depreciation rose 26.6% in H1FY27, indicating that the reported capex is entering the asset base.
Key concerns
- Raw-material cost increased 33.8% YoY to ₹157.69 crore, faster than the 27.8% revenue increase, compressing gross margin to 40.4% from 43.1%; the filing does not establish pricing power or input-cost relief.
- The margin recovery was partly supported by a ₹21.66 crore negative inventory-change expense, making earnings quality dependent on production and inventory accounting in the quarter.
- Finance cost increased 26.8% YoY to ₹5.78 crore, while consolidated borrowings reached ₹369.81 crore and net debt rose to ₹347.08 crore from ₹256.84 crore at March 2026.
- H1 operating cash flow fell to ₹15.83 crore from ₹36.54 crore despite PAT of ₹25.10 crore, while capex reached ₹94.43 crore, increasing funding dependence.
Research and educational content only. Not investment advice.