How has been the historical performance of Prime Focus?

Revenue and Operating Performance Trends

Prime Focus's net sales demonstrated notable volatility between fiscal years ending March 2019 and March 2025. The company’s revenue peaked in March 2023 at ₹4,644.26 crores, before declining to ₹3,598.88 crores by March 2025. This decline followed a previous rebound from a low of ₹2,536.49 crores in March 2021, reflecting the impact of market conditions and operational factors. Throughout this period, other operating income remained nil, indicating reliance solely on core sales for operating income.

Operating expenses excluding depreciation have generally tracked revenue movements, with total expenditure rising to ₹3,697.90 crores in March 2024 before easing to ₹2,812.84 crores in March 2025. Employee costs consistently represented the largest expense category, peaking near ₹2,897.75 crores in March 2023 and reducing to ₹2,182.43 crores by March 2025. Manufacturing and selling expenses also fluctuated but remained comparatively modest.

Operating profit before other income (PBDIT) showed significant swings, reaching a high of ₹974.06 crores in March 2023, then contracting sharply to ₹786.04 crores in March 2025. When factoring in other income, operating profit peaked at ₹1,253.55 crores in March 2023 but declined to ₹1,012.66 crores by March 2025. Despite these fluctuations, the operating profit margin (excluding other income) remained relatively strong, exceeding 20% in most years except for a dip to 6.43% in March 2024.

Profitability and Earnings Analysis

Prime Focus has faced persistent challenges in translating operating profits into net profitability. The company reported a consolidated net profit of ₹147.29 crores in March 2023, a rare positive result amid a series of losses in other years. However, this was followed by losses of ₹377.11 crores and ₹404.54 crores in March 2025 and March 2024 respectively. Earnings per share (EPS) mirrored this trend, swinging from a positive ₹4.92 in March 2023 to negative ₹12.57 in March 2025.

Interest expenses have risen steadily, reaching ₹537.92 crores in March 2025, which, combined with significant depreciation charges and exceptional items, have weighed heavily on profitability. The company’s profit before tax has been negative in four of the last six years, underscoring ongoing financial pressures. The PAT margin has remained negative in most years, with the exception of a modest positive margin in March 2023.

Balance Sheet and Financial Position

Prime Focus’s total assets have expanded from ₹4,897.07 crores in March 2020 to ₹8,342.06 crores in March 2025, reflecting investments in fixed assets and working capital. The net block of assets increased steadily, supported by capital work in progress and intangible assets under development. However, the company’s net current assets position turned negative in March 2025, indicating liquidity pressures.

On the liabilities side, total debt rose from ₹2,281.86 crores in March 2020 to ₹4,092.84 crores in March 2025, with a marked increase in short-term borrowings in the latest year. Long-term borrowings have decreased from their peak in March 2023 but remain substantial. Shareholders’ funds improved significantly to ₹758.94 crores in March 2025 from a low base in prior years, aided by reserves recovery and minority interest growth.

Cash Flow and Liquidity

Cash flow from operating activities has been inconsistent, with a positive ₹295 crores in March 2025 but a negative cash flow in March 2024. Investing activities consistently consumed cash, reflecting ongoing capital expenditure. Financing activities have varied, with inflows in recent years supporting liquidity. The closing cash and cash equivalents improved to ₹214 crores in March 2025, up from ₹138 crores the previous year, providing some buffer for operational needs.

Summary of Historical Performance

Overall, Prime Focus’s historical performance reveals a company that has experienced significant revenue fluctuations and profitability challenges over the past six years. While operating margins have generally remained healthy, high interest costs, depreciation, and exceptional charges have eroded net profits. The balance sheet shows growth in asset base and shareholder funds, but also rising debt levels and liquidity constraints. Cash flow patterns indicate ongoing investment and financing activity to support operations.

Investors analysing Prime Focus should weigh these financial dynamics carefully, considering both the company’s operational strengths and the risks posed by its debt and profitability volatility. The recent improvement in operating profit and cash reserves may offer some optimism, but sustained profitability and debt management remain critical for future stability.

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