Prime Focus

Prime Focus

Shrinath Mithanthaya

Shrinathm@MotilalOswal.com

+ 91 22 39825421

SHAREHOLDING PATTERN

PRIME FOCUS vs SENSEX

(REBASED) SINCE LISTING

Sector Entertainment

Bloomberg PRIF IN

Reuters PRFO.BO

BSE Sensex 14,478

S&P CNX 4,196

Equity Shares (m) 12.7

Face Value (Rs) 10

52-Week Range 428 / 274

1, 6m Rel. Perf. (%) -13, -23

M.Cap. (Rs b) 4.7

Avg. daily volume ('000) 65

Buy 06 February 2007

CMP: Rs367 Target: Rs555 Initiating Coverage

MOSt Mid-caps

© Motilal Oswal Securities Ltd., Hoechst House, 3rd Floor, Nariman Point, Mumbai 400 021 Tel: +91 22 39825500

Y EAR NET SALES PAT EPS EPS ROE ROCE P/ E P/ BV EV / EV /

END (RS M ) ( RS M ) ( RS) Y oY ( %) (%) (%) (X ) (X ) SALES EBITDA

3/06 424 140 13.6 45.8 27.8 27.7 27.0 5.4 9.0 15.7

3/07E 593 211 16.6 22.1 16.3 22.5 22.1 2.5 6.8 11.0

3/08E 831 280 22.0 32.4 14.0 21.5 16.7 2.2 4.9 7.8

3/09E 1,163 412 32.4 47.2 18.1 27.7 11.3 1.9 3.4 5.4

Note: Numbers are for PF India; 55% subsidiary PF UK is valued separately E: MOSt estimates

Prime-time action

Outsourcing of entertainment technology (ET) services is a huge

opportunity for low-cost countries like India. As a global ET player, Prime

Focus (PF) is poised to profitably scale up its business with low risks. We

expect EPS CAGR of 40% through FY09. Our sum-of-parts target price

for PF is Rs555, an upside of 51%. BUY.

Indian ET - the sequel to Indian IT

Outsourcing of ET services is a huge opportunity for low-cost

countries. India is strong on all the key success factors - technology,

talent and tongue (ie, comfort level with English). Indian ET has

the potential to mirror Indian IT, both in terms of revenue growth

and moving up the value chain.

Prime Focus is a global ET player

Prime Focus offers the full range of ET services in India, and has

built strong relationships with both customers and vendors. In May

2006, it acquired VTR Plc, UK. We believe this will help PF get

business given the advantage of (1) UK-based front-end...