In today’s Finshots, we tell you about an Indian media company that’s been rising this week.

The Story

Think about watching Dune. Or Inception. Or Interstellar. The kind of films that awe and swallow you whole with their visuals. Giant sandworms, collapsing dreamscapes, black holes you can almost feel tugging at you.

But what’s less obvious is that behind all of that spectacle sits an Indian company – Prime Focus. Through its UK-based arm Double Negative (DNEG), it has been quietly shaping the biggest blockbusters in the world for over a decade. It’s one of the few Indian names that show up in Oscar credits, but back home, it was mostly known for being a smallcap stock that saw sharp swings. But over the past few weeks, the stock has been hitting upper circuits and drawn big investors.

And to understand why, you first need to understand what Prime Focus actually is.

Founded in a Mumbai garage in 1997 by Namit Malhotra, the grandson of Bollywood producer M.N. Malhotra, Prime Focus began as a modest post-production outfit. Post-production is everything that happens after the camera stops rolling: editing, colour grading, sound mixing, and increasingly, visual effects (VFX). By 2006, the company had listed on the stock exchange and even pioneered digital intermediate (DI) technology in India, a system that digitised film reels, so colour correction, grading and visual tweaks could be done digitally.

Around the same time, VFX was booming worldwide, and Prime Focus stepped into that space too — but mainly through Bollywood movies and ad work. So it had built a strong domestic reputation, with early forays into stereo conversion for global films too. Yet it still lacked the scale to compete in Hollywood.

The most transformative move came in 2014, when it acquired a majority stake in DNEG — the VFX studio already famous for working on Christopher Nolan films. That one deal turned Prime Focus from a local vendor into a global heavyweight. Today, DNEG contributes nearly 80% of consolidated revenue, employs over 10,000 people across countries, and competes with the likes of Weta FX and Framestore. And yeah, in July 2025, Prime Focus approved a preferential allotment that, once completed, is expected to raise its stake in DNEG to about 88%.

Alongside DNEG sits ReDefine, which handles mid-budget shows and streaming work, and Prime Focus Technologies, which handles localisation, subtitling and digital delivery for OTT giants. This arm may only contribute around 10–12% of revenue, but it makes the group stickier in client relationships as it embeds them beyond the creative stage. And more recently, Prime Focus has seeded its own studio arm in India, with Ramayana — starring Ranbir Kapoor, who personally invested ₹15 crores into the company — as its marquee project.

So on the surface, this business looks like a dream portfolio. Oscars, global blockbusters, Netflix and Amazon contracts, and now a big Indian IP.

But look deeper and the economics tell a more sobering tale.

You see, Prime Focus is a services company with staggering fixed costs. You need the top talent in the VFX industry, which also means fat salaries. And staff expenses alone in FY24 were ₹2,885 crores, or over 70% of revenue. Add another ₹558 crores in finance costs, and you have a structure that thrives when the order book is full, but collapses when projects dry up. And dry they did. Between FY19 and FY23, when revenue grew from about ₹2,500 crores to ₹4,600 crores, EBITDA margins were healthy at 14–24%. But in FY24, when revenue slipped to ₹3,950 crores, those margins collapsed to barely 6%, and the company posted a net loss of ₹488 crores.

The culprit?

Well, it wasn’t poor capability but the Hollywood writers’ and actors’ strikes in 2023–24, which froze productions worldwide. So with no new shoots, there was no post-production, and Prime Focus had thousands of artists sitting on benches, costly software licences running, and global facilities to maintain. In short, it had to carry a vast cost base with little to bill.

Now most companies in that situation would have downsized. But the twist in the story is that Prime Focus didn’t. Instead, the management doubled down the bets.

In July 2024, its subsidiary DNEG acquired Prime Focus Technologies (PFT) for ₹693 crores. Now, PFT wasn’t into VFX, but it specialised in backend work and had built a generative AI platform for the media industry. So on paper the deal looked like an intra-group shuffle, but strategically it mattered. Because studios increasingly want fewer vendors who can handle both the creative and the backend. And by merging the two, DNEG could pitch itself as a one-stop partner, from crafting visuals to mastering and delivering content for streaming.

At the same time, Prime Focus invested in AI-driven tools like Brahma to compress turnaround times and costs. And rather than wait only on Hollywood, it doubled down on India. Prime Focus Studios tied itself to Ramayana, pitched as India’s most ambitious visual epic. With DNEG and ReDefine handling the visuals, and Kapoor starring in it, the project became both pipeline and publicity.

And then came the payoff.

In Q1 FY26, as the Hollywood pipeline reopened in 2025 and Indian projects gained traction, revenue from operations jumped 23% year-on-year to ₹976 crores, total income touched ₹1,023 crores, and net profit swung to ₹110 crores versus a ₹158 crore loss in the same quarter a year earlier. EBITDA margins rebounded into the teens. The same benches that dragged margins down in FY24 now amplified them as utilisation returned.

And that was the moment markets were waiting for. Proof that FY24 was not a death spiral, but a temporary strike-induced slump. And right on cue, respected investors in India stepped in. In early September 2025, block deals showed Madhu and Yash Kela’s Singularity AMC buying about 48 lakh shares (about 2% of the company), Ramesh Damani adding 8 lakh shares, and Utpal Sheth taking 17.5 lakh. Together they invested nearly ₹146 crores.

And this was a powerful signal. Since these are investors who know that in fixed-cost businesses, profits can swing hardest right after the worst losses. They’ve seen it in metals, in cement, in airlines… and now in VFX. They also recognise the operating leverage at play in a business that looks glamorous on the surface but is governed by the same hard rules of capacity and demand.

So, why would they be interested now, you ask?

First, because Prime Focus sits on a global franchise that few Indian companies can match. DNEG is one of only a handful of studios trusted with nine-figure-budget films, and credibility at that level is an enormous moat.

Second, because the numbers showed operating leverage in action. Losses ballooned when revenue fell, but profits surged just as dramatically when revenue recovered. If the Hollywood pipeline stays open, Prime Focus could deliver sequential quarters of profit growth without massive new investments.

Third, because management used the downturn to strengthen the model like integrating technology, betting on India, and pushing AI.

And lastly, because industry tailwinds are strong. The Indian VFX and animation industry, already a ₹10,300 crore segment in 2024, is growing and expected to touch ₹14,700 crores by 2027. Global studios are outsourcing more to India, where an entry-level artist costs less than counterparts. And Prime Focus seems to be well positioned for this boom.

Of course, part of the run-up could also be about things markets can’t yet see. Big investors and ones involved with production might have a closer line to what’s brewing. Maybe DNEG is quietly securing bigger franchises, maybe AI-driven production tools will cut costs faster than expected, or say there are more mega-budget launches. But again, that’s all a guesswork.

So the question now is what happens next?

Well, again that’s anyone’s guess. But what we know is this is still a services business tied to production cycles. And another strike or any slowdown could sink utilisation. Plus, you need to look at the numbers. The company still has heavy debt, with annual finance costs of over ₹550 crores. Profits need to convert into cash flows that can service and reduce leverage, not just paper earnings. Working capital is chunky, with large receivables and milestone-based collections that delay cash conversion. The business is still highly reliant on international markets — Hollywood and streaming account for the bulk of revenue — so any disruption or studio budget cut could hurt. And the current narrative also largely leans on one project, Ramayana. If timelines slip or box office expectations disappoint, sentiment could flip just as quickly.

But it’s also true that Prime Focus has pulled off something rare.

It survived a once-in-a-generation content freeze, absorbed the pain of collapsing margins, preserved its global scale, stitched in new capabilities, and re-emerged with investors and a mega Indian project. In doing so, it reminded the market of why it mattered in the first place… because it’s one of the few Indian companies that can turn scripts into spectacles the whole world watches.

So maybe the bigger question isn’t just how high the stock can run, but whether Ramayana and the next slate of films can carry the same weight as Dune.

If it pulls that off, the credits might finally roll in Prime Focus’ favour. If not, it could just be another rerun of the ups and downs investors have seen before.

Until then…

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