Synopsis: Prime Focus shares have surged nearly 86% in one year despite an 18% fall in the Nifty Media Index, driven by a recent profit turnaround, rising cash flows, marquee investor interest, and expectations from its ₹4,000 crore Ramayana project.
At a time when the Nifty Media Index has declined sharply by 18.7 percent and most media stocks have delivered negative returns, Prime Focus Limited has emerged as a clear outlier. Over the past one year, the stock has rallied close to 86 percent, drawing significant investor attention. This sharp re-rating has come despite a challenging backdrop for the media and entertainment sector, raising an important question, what is driving this surge in Prime Focus shares?
Prime Focus is best known as the producer of the upcoming big-budget mythological epic Ramayana, which is being positioned as a global, Hollywood-scale release. Beyond filmmaking, the company is one of the world’s largest post-production and visual effects service providers, with operations spread across multiple continents and deep integration into global content pipelines.
Prime Focus Limited, with a market capitalization of Rs. 16,823 crore, closed at Rs. 216.80 per equity share, down by 6.20 percent from its previous day’s close price of Rs. 231.12 per equity share.
Prime Focus Limited has delivered returns across multiple timeframes, with a 1-month return of -3.64 percent, a 3-month return of 25.7 percent, and a 6-month return of 34 percent The stock has delivered a 86 percent return in the past 1 year and in the longer frame of 5 years it has delivered a return of 351.6 percent.
Prime Focus Limited, founded in 1997 and headquartered in Mumbai, India, is a global media services provider operating in India, the UK, US, Canada, Australia, and beyond, offering integrated solutions like visual effects (VFX), stereo 2D-to-3D conversion, animation, post-production (color grading, audio), equipment rental, and digital asset management primarily to Hollywood studios, OTT platforms, broadcasters, advertisers, and production houses. The company also engages in film investments, content restoration, music production, technology or software services, a training institute, and real estate leasing.
Subsidiaries Powering the Core Business
Prime Focus operates through several key subsidiaries that form the backbone of its global operations. DNEG, formerly Double Negative, is the group’s flagship visual effects company and is responsible for high-end VFX, animation, and CGI work for major Hollywood films and global streaming content. It has earned multiple Oscars, BAFTAs, and Emmys for its work.
Prime Focus Studios functions as a film and series producer and co-producer, handling financing, development, and large-scale productions. Brahma AI focuses on building AI-driven solutions for media, entertainment, and enterprise use, including content creation and automation. Brahma AI Holdings acts as the holding entity for AI and technology-focused businesses, while Brahma AI India Technologies manages software development, AI engineering, and technical execution from India.
Historical Financial Performance
Over the past five years, Prime Focus has demonstrated steady top-line growth, but profitability has remained elusive. The company’s revenue increased by 41 percent from Rs. 2,536 crore in FY21 to Rs. 3,599 crore in FY25, reflecting expanding scale and strong demand for its post-production and VFX services. However, this growth has not translated into consistent profits.
During the same period, losses widened significantly, moving from a loss of Rs. 56 crore in FY21 to a loss of Rs. 458 crore in FY25. High operating costs, heavy interest expenses, and the capital-intensive nature of global VFX and content production have continued to pressure the bottom line. This contrast between rising revenue and widening losses has been a long-standing concern for investors.
Borrowings Rise Alongside Expansion
Prime Focus Limited’s aggressive expansion and investment cycle has also led to a sharp rise in borrowings. The company’s debt increased from Rs. 3,904 crore in FY21 to Rs. 5,255 crore by September 2025. This rise in leverage reflects funding requirements for global operations, technology investments, and large-scale content projects such as Ramayana.
While the elevated debt levels increase financial risk, the company has indicated that much of its borrowing for the Ramayana movie is dollar-denominated and tied to its international VFX subsidiary, DNEG, which commands stronger global valuations.
High Valuation
Currently, Prime Focus is trading at a steep valuation. The stock is currently valued at around 120 times earnings, significantly higher than the industry average price-to-earnings multiple of 38.2 times. This premium suggests that the market is not pricing the company on historical performance, but on future expectations linked to content monetisation, global VFX leadership, and the success of Ramayana. Such valuations leave little room for execution errors, making future performance critical in sustaining the rally.
Turnaround Signals Spark
One of the key triggers behind the recent rally is a visible operational turnaround in the current financial year. In H1FY26, Prime Focus reported a revenue of Rs. 2,084.09 crore and profit of Rs. 114.53 crore, marking a sharp reversal from losses in previous years. This profit has been accompanied by improved cash flow metrics, which has reassured the market about near-term financial stability.
In March 2025, the company generated Rs. 295 crore in operating cash flow and reported net cash flow of Rs. 76 crore, signalling better control over working capital and execution. These numbers have played a crucial role in shifting investor sentiment from skepticism to cautious optimism.
Big Names Betting on the Story
Investor confidence has also been boosted by high-profile stake purchases. Ace investor Madhusudan Kela via its Singularity Equity Fund I and actor Ranbir Kapoor have acquired stakes in the company through a preferential issue. Madhusudan Kela acquired 20,83,333 shares, while Ranbir Kapoor purchased 12,50,000 shares. These investments have added credibility to the turnaround narrative and strengthened market confidence.
Ramayana: The Moonshot Driving the Narrative
At the center of the Prime Focus investment story is Ramayana, a two-part epic with a reported investment of nearly Rs. 4,000 crore. The film is being positioned as a global theatrical release and is expected to showcase India’s technological and creative capabilities at an unprecedented scale. With extensive involvement from DNEG’s global VFX teams, the project is seen as a potential inflection point for the company.
However, the scale of the investment also makes it a high-risk, high-reward bet. Success could significantly improve profitability and brand value, while failure could strain the balance sheet further.
Conclusion
Prime Focus Limited’s sharp stock rally is being driven by a mix of turnaround signals, strong cash flows, marquee investor participation, and the ambitious Ramayana project. While revenue growth and recent profitability have boosted confidence, rising debt, premium valuations, and execution risks remain key concerns. The stock’s future trajectory will largely depend on whether the company can convert creative prestige and scale into sustainable profits.
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