Ramayana trailer released: Can Prime Focus turn India's most expensive movie into a winning investment?

The highly anticipated trailer of the upcoming Ramayana movie was released on YouTube on July 30. Many people are eagerly awaiting the release of the movie, which is considered India’s most expensive film, with a budget of more than ₹4,000 crore ($417 million). It will be a two-part epic, with Part 1 scheduled for Diwali 2026 and Part 2 for Diwali 2027.

Ramayana is a VFX-heavy project that attempts to honour India’s cultural heritage. The VFX part of the movie is done by UK-based Double Negative (DNEG), which has worked on blockbuster Hollywood movies like Inception, Interstellar, Dune and even the recently released The Odyssey. In fact, the company has won eight Oscars for visual effects in several high-budget movies.

DNEG is owned by Indian visual effects company Prime Focus Studios (NSE: PFOCUS), which is also the lead producer of Ramayana. The company handles post-production work for both domestic and foreign movies. In 2014, the company acquired a majority stake in DNEG, which currently stands at 88.2%. Over the years, DNEG has helped Prime Focus grow from being a local vendor into a global VFX giant.

Currently, DNEG contributes more than 80% of the consolidated revenue of Prime Focus. In fact, DNEG’s valuation of around $2.5 billion in the unlisted space is at par with the market cap of parent company Prime Focus, which is around ₹23,000 crore.

Prime Focus shares have also seen strong traction of late. The stock has gained over 35% so far this month in anticipation of the Ramayana trailer launch. The stock has gained 98% in the last 12 months and over 380% in the last five years.

Several marquee investors, including Ramesh Damani, Madhusudan Kela and Utpal Sheth have bought a cumulative 3.3% stake in the company in September 2025.

Investors are flocking to Prime Focus as the company has a unique business standpoint with several global blockbusters, Oscar winners, and OTT post-production contracts with Netflix and Amazon. Recently, the company has also entered the artificial intelligence (AI) business by launching Brahma AI, an enterprise AI content platform in partnership with Google Cloud.

Despite a strong business portfolio, big-ticket clients and AI business, Prime Focus’ underlying fundamentals have been quite volatile.

Unstable earnings

Prime Focus reported net loss of ₹488 crore and ₹458 crore in FY24 and FY25, respectively. However, the company returned to profitability in FY26 with net profit of ₹301 crore, indicating high volatility in earnings.

Employee expenses and fixed costs eat into the margins and profitability as the company’s incurs high fixed costs in form of new technologies, software license and high salaries to attract top talent from the VFX industry.

To sustain business growth, the company requires a pipeline of new projects but if new work dries up, then revenue may collapse. In 2023, after the major strike in Hollywood by artists due to poor pay resulted in fewer projects for Prime Focus, leading to net losses for two consecutive fiscal years.

High debt

As of March 31, 2026, Prime Focus reported a total gross debt of ₹5,062 crore, which rose nearly 20% compared to the FY25 gross debt of ₹4,234 crore. The company’s debt has been on the rise for the past few fiscal years mainly due to large global acquisitions and heavy capital spending on studio expansions.

High financial obligations and interest payments have consumed a large share of the company's operating profits with annual finance costs of over ₹500 crore.

The company plans to reduce debt by $150 to $200m over the next 12 months, supported by monetisation of investment content assets and operational working capital improvement.

Dependency on international markets

The bulk of the company’s revenue comes from Hollywood movies and studios which are ready to spend millions on VFX. Hence, any cut down in budgets or disruption could impact the company’s financials.

Over the years, Prime Focus has acquired new businesses to expand its footprint in the global markets and earned a reputation after working on multiple blockbusters. The current hype around the company is mainly due to the Ramayana movie release. Many investors are wondering if Prime Focus could turn India's biggest movie into a winning investment. Hence, a lot depends on one movie.

It remains to be seen whether Ramayana becomes a box-office success and translates into market success for the company.

Disclaimer:

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