Prime Focus is a company focused on providing creative and technical services to the visual entertainment industry covering films, broadcasting and advertising. The services they provide include post-production services as well as visual effects to movies, feature films and commercials.
In 2005, to provide the commercials industry with a boutique facility, with infrastructure and interiors at par with international studios, they setup a studio in Lower Parel, Mumbai and a facility in Chennai was commissioned to cater to the South Indian Film market. They also have a facility in London which offers visual effects services for film and television clients, and another in Mohali near Chandigarh focusing on 2D- 3D conversion.
In 2006, it acquired the GBP 20 million, UK-based media service company of VTR Group. This has given it a footprint in the UK and European markets where outsourcing of services for visual effects as well as post production is a growing trend. As the visual effects-based films become more and more popular, the percentage of spend in the films in Bollywood is ramping up to the levels of about 30% to 40% of the budget, in certain cases. And, this has led to growth for the business in which Prime Focus operates.
It came out with an IPO in May ’06 at a price of about 42 (price adjusted for stock split in Nov ’10 to fv 1 from 10 earlier) and in the next 2 years went on to scale highs of 127 before the 2008 crash when it came down to as low as 10-12. However, considering its unique position in the industry and growing scope of services, it again bounced back four-fold to levels of about 40 in the next 2 years and is currently quoting around the 50 mark.
Notable among its works is Avatar where it did work worth $5 million with a 35% margin. Post this success they had large orders from Hollywood studios for converting a lot of their 2D films to 3D. Major successes in their portfolio are the films Clash of Titans and Harry Potter & the Deathly Hallows where they provided these services. Continuing this trend, last year they were selected by the US-based Lucasfilm to work on conversion of Star Wars: Episode I The Phantom Menace into 3D for theatre release. They also delivered three big movies for the US market - Green Lantern, Transformers - 3, and Harry Potter 7B.
Closer home, last year they signed a multi-film deal with leading movie studio UTV Motion Pictures, to service the entire production and post production requirement of a slate of the latter's films. This would include visual effects, sound and lab services, as well as provision of cameras lenses and more. In addition, Eros International Media tied up with the company for digitising and cataloguing its entire library of movies. The company also won was selected by Star TV to upgrade its content operations infrastructure.
Promoters hold close to 50% of the equity capital while FIIs hold about 10%. Rakesh Jhunjunwala holds slightly more than 6% stake in the company. A key development to note is that a few days back they allotted close to 1 crore shares to the promoters @55/share leading to increase in their stake by about 2%.So close to 70% of the equity is in strong hands lending enough confidence in the long term prospects of the company.
Currently 35-38% of its revenue comes from US, about 35% from UK and around 30% from India, leading to a fairly balanced distribution across local and global markets.
A focussed approach towards a niche domain and sound global infrastructure for servicing their clients, quite a few of them reputed names in the global film world, makes this a unique play in the media and entertainment sector, though a bit expensive on the valuation front which may be justified by their niche position.
Check out their site http://www.primefocusworld.com/
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