Prime Focus expands margins, but a tax benefit props up Q4 profit
Revenue grew faster than expenses, lifting operating margin to 35.28%, while negative other income and a tax benefit shaped reported profit.
Filed 29 May 2026, 00:07 IST · Prime Focus Ltd (PFOCUS)
Key takeaways
- Consolidated operating margin rose 11.56 percentage points year on year to 35.28% as revenue growth outpaced expense growth.
- Net profit reached Rs 117.70 cr, but a -44.05% tax rate indicates that a tax benefit materially supported earnings.
- The stock fell 2.69% on the results day, broadly in line with its history of declining after six of its last eight results.
Price around the results
Operating leverage lifted Q4 performance
Consolidated revenue grew 41.43% year on year to Rs 1,384.47 cr, while expenses increased 19.98%, allowing operating profit to rise 110.40%. The same pattern held sequentially: revenue grew 14.68% against 10.24% expense growth, lifting operating margin by 2.60 percentage points. Prime Focus's 35.28% margin was 20.47 percentage points above the 14.81% median for the 93 Consumer Discretionary peers that had reported.
Profit conversion was affected by tax and below-operating costs
Interest rose 11.47% year on year and depreciation increased 73.08%, limiting the conversion of Rs 488.48 cr of operating profit into Rs 81.71 cr of pre-tax profit. Other income was negative and represented -50.15% of pre-tax profit, making it a drag rather than a support to earnings. Net profit was also aided by a -44.05% tax rate, down 46.28 percentage points year on year and 60.33 percentage points sequentially.
Margin recovery extended into a third quarter
Operating margin has risen from 23.88% in Q1FY26 to 23.94% in Q2FY26, 32.68% in Q3FY26 and 35.28% in Q4FY26. This is the third consecutive quarterly increase and leaves the margin 11.56 percentage points above Q4FY25. Net profit also moved from a loss of Rs 251.62 cr a year earlier to Rs 117.70 cr, though the comparison includes the tax benefit and the sharp change in other income.
The initial market reaction was within Prime Focus's usual range
The stock fell 2.69% on the results day and was down 4.78% by the next session. That response was not unusual against the last eight result reactions: the stock declined six times and its median absolute move was 3.56%.
Q4FY26 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹1,384 cr | ₹1,207 cr | +14.68% | +41.43% |
| Other income | ₹-41 cr | ₹-12 cr | -247.88% | +82.25% |
| Expenses | ₹896 cr | ₹813 cr | +10.24% | +19.98% |
| Operating profit | ₹488 cr | ₹395 cr | +23.82% | +110.40% |
| Operating margin (%) | 35.28% | 32.68% | — | — |
| Interest | ₹148 cr | ₹133 cr | +11.42% | +11.47% |
| Depreciation | ₹218 cr | ₹167 cr | +30.24% | +73.08% |
| Profit before tax | ₹82 cr | ₹83 cr | -1.15% | — |
| Tax | ₹-36 cr | ₹13 cr | — | -528.10% |
| Net profit | ₹118 cr | ₹69 cr | +70.09% | — |
| EPS (₹) | ₹1.06 | ₹0.91 | +16.48% | — |
Operating margin of 35.28% compares with a Consumer Discretionary sector median of 14.81% across 93 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -2.69% | -1.19% |
| Next session | -4.78% | — |
| 5 sessions | +0.14% | +2.40% |
| 15 sessions | -3.39% | — |
| 30 sessions | +12.37% | — |
Volume on the results session was 0.24× its 20-day average.
What to watch
- Whether operating margin holds above 35.28% after three consecutive quarterly increases.
- Whether the tax rate moves back from the -44.05% reported in Q4FY26.
- Whether revenue growth remains ahead of expense growth after the year-on-year gap of 41.43% versus 19.98%.