Shares of Prime Focus fell 1.95% in trade on Monday even as ICICI Securities initiated coverage on the stock with a 'buy' rating and a price target of Rs 375, implying an upside of 22% from its current market price.
The stock pared most of its losses to trade 0.52% lower at Rs 305.5 as of 12:40 p.m. on NSE.
Secret Sauce For Theatrical Success
In its coverage intiation note, ICICI Securities outlined that after the Covid-19 pandemic, global audiences have become more demanding with regard to the experiential aspect of what they watch in theatres.
The demand shift and resulting changes in budget are structural, according to the brokerage, with the proportion of visual effects in movie budgets has rising from 5-20% to 20-40% in tentpole productions (in India and globally).
This structural transformation is expected to spell gains for Prime Focus, the brokerage highlighted.
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British visual effects and animation studio, Double Negative (DNEG) has bagged 8 Oscars in the last 15 years, out of which three were won in the last 5 years itself and is a key partner for the largest global production houses, ICICI said.
"Additionally, Brahma AI, which has proprietary models such as ATMAN (photorealistic digital human) and VAANI (voice and visual localisation engine), is helping it diversify its client base beyond the M&E industry and has material optionality," it noted.
On top of that, ICICI Securities projected, if the recently announced fund raise helps to reduce their debt burden, there is room for further re-rating.
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