Picturepost Studios coming with IPO to raise Rs 18.72 crore

Picturepost Studios

• Picturepost Studios is coming out with initial public offering (IPO) of 78,00,000 shares in a price band Rs 22-24 per equity share.
• The issue will open on August 2, 2024 and will close on August 6, 2024.
• The shares will be listed on NSE Emerge Platform.
• The face value of the share is Rs 1 and is priced 22 times of its face value on the lower side and 24 times on the higher side.
• Book running lead manager to the issue is Shreni Shares.
• Compliance Officer for the issue is Abhishek Sharma.

Profile of the company

Picturepost Studios is a creative and innovative post-production Company specializing in film editing, Computer Generated Imagery (CGI), visual effects (VFX), video conversion, grading, film and commercial mastering of channels and digital platforms. Picturepost Studios, with a team of professionals, offer a wide range of services to cater to the diverse needs of the entertainment industry. It is one of the visual effects Company covering the entire spectrum of post- production requirements ranging from digital intermediates and visual effects to online editorials and operates as a studio, specializing in Films, Web series and advertisements, with a strong focus on high-end colour grading, motion design, visual effects, and online editing. It pushs creative boundaries and embrace innovation. Its commitment to delivering cutting-edge solutions and adapt to evolving technologies has propelled us to rapid success. It specializes in creating visual experiences that captive audience around the world. Post-production is a part of the process of filmmaking, video production and photography. 

Post-production includes all stages of production occurring after principal photography or recording individual program segments. Its studio has required equipment, software, and skilled professionals to enhance the quality of the footage and bring the Director's vision to life. It ensures that the final product meets industry standards and effectively communicates the intended message to the audience. Overall, post-production studios play a vital role in transforming raw footage into a polished, professional film or video project. Its services portfolio allows Producers, Directors and Filmmakers to build bespoke addressing disparate aspects of advertisements or films for end viewers.

Proceed is being used for:

• Funding of capital expenditure requirements of the company towards purchase of equipment and Software.
• Repayment/prepayment of all or certain of its borrowings availed by the company.
• General corporate purposes.

Industry Overview

The Indian Media and Entertainment (M&E) industry is a sunrise sector for the economy and is making significant strides. The increasing availability of fast and cheap internet, rising incomes, and increasing purchases of consumer durables have significantly aided the industry. India’s media and entertainment industry are unique as compared to other markets. The industry is well known for its extremely high volumes and rising Average Revenue Per User (ARPU). This significantly aided the country’s industry and made India leading in terms of digital adoption and provided companies with uninterrupted rich data to understand their customers better. India has also experienced growing opportunities in the VFX sector as the focus shifted globally to India as a preferred content creator.

As per the latest report by the EY, India’s Media and entertainment Industry is expected to reach Rs 2.34 trillion ($29.2 billion), then grow at a CAGR of 10% to reach Rs 2.83 trillion ($35.4 billion) by 2025. Advertising revenue in India is projected to reach Rs 394 billion ($5.42 billion) by 2024. The share of traditional media (television, print, filmed entertainment, OOH, music, radio) stood at 58% of the media and entertainment sector revenues in 2022. 

The Indian M&E industry is on an impressive growth path. The industry is expected to grow at a much faster rate than the global average rate. This can be majorly credited to rising incomes, increasing internet penetration and a growing push toward digital adoption. In the long run, growth is the M&E industry is expected in retail advertisement on the back of several players entering the food and beverages segment, E-commerce gaining more popularity in the country, and domestic companies testing out the waters.

Pros and strengths

Entrenched relationships with marquee clients: Developing and maintaining long term relationships with its producers, production houses, filmmakers and advertisers will help it in achieving the organizational goals, increasing revenue and increasing brand image of the company. Over the years it has got associated with reputed clients. Upon the announcement of a new project, it initiates contacts with its clients to propose collaboration for post-production services. Subsequently, they furnish it with a comprehensive scope of work sheet and offline moves for its review and analysis. This enables it to meticulously formulate the post-production timeline and budgets. Its dedicated, focused approach, efficient and timely delivery of services has helped it to build strong relationships over a number of years.

Introduce Innovative techniques: It is applying newer technologies into post production to improve the efficiency and creativity of the content, that satisfies the end users to display the same on the audio visual or commercial platforms. Its core business operations lie in the creativity and innovative techniques which are used by its professional staff and its staff also provides suggestion to the producers, directors and filmmakers to innovate in a particular manner and use such techniques which helps them in getting final results in a satisfactory manner and help them to build good image in the industry.

Proprietary technology platform that ensures scalability: One of the keys aspects of its business model is a strong focus on technology. Its technology is aimed at ensuring that the producers, Directors and advertisers have a ‘hassle-free’ and smooth execution and final stage experience. Its platform addresses aspects such as benefits to have a limitless creative possibilities, cost-effectiveness, time-saving etc.

Risks and concerns

Operates in a constantly evolving VFX market: The company operates in the entertainment industry which involves a substantial degree of risk, including as a result of rapidly evolving changes in technology, digital content platforms and consumer tastes, the company requires it to quickly react to changing technologies, market dynamics and client's behaviour and preference. As a result, the industry has seen high demand for OTT content, which has resulted in increased opportunities for VFX services providers. The company's success at winning opportunities to provide VFX services for content producers depends on its ability to effectively adapt its services to the changes, content producers develop in response to evolving consumer preferences. If it fail to keep pace with its customers' needs or fail to respond to changes in technology, it may be unable to compete effectively which could have a material adverse effect on its business, financial condition, cash flow and results of operations.

Depend on relationships with production house and film directors: It generates projects through its relationship with production house and films directors and other industry participants. Its failure to maintain these relationships, or to establish and capitalise on new relationships, could harm its business or prevent its business from growing, which could have a material adverse effect on its business, prospects, financial condition and results of operations.

Face intense competition: It faces intense competition from Indian competitors, many of which are substantially larger and have greater financial resources than it. Growth in entertainment industry in recent years has attracted new industry participants and competitors. The entry of such competitors may change the media and entertainment industry in ways that may not favour it. Domestic competitors of a scale similar to or greater than its own may impact its ability to attract creative and technical talent and other scarce resources including content, which could have a material adverse effect on its business, prospects, financial condition and results of operations.

Outlook

Picturepost Studios is a creative and innovative post-production Company specializing in film editing, CGI, visual effects VFX, video conversion, grading, film and commercial mastering of channels and digital platforms. The Company was established in the year 2019 as a Limited Liability Partnership. The company, with a team of professionals, offers a wide range of services to cater to the diverse needs of the entertainment industry. On the concern side, it operates in an industry which is highly sensitive with regards to maintenance of secrecy of the projects and its contents. It has in place firewall, security systems and procedures to protect the projects and its contents. Piracy of project content, its information, digital effects including internet piracy and the sale of counterfeit consumer products, may decrease revenue from the exploitation of its products. Any failure on its part to maintain secrecy of its projects, will have an adverse effect on its results of operations and financial condition. 

The company is coming out with a maiden IPO of 78,00,000 equity shares of Rs 1 each. The issue has been offered in a price band of Rs 22-24 per equity share. The aggregate size of the offer is around Rs 17.16 crore to Rs 18.72 crore based on lower and upper price band respectively. On performance front, revenue from operations had increased from Rs 29.00 lakh in Fiscal 2022 to Rs 1084.84 lakh in Fiscal 2023. The company reported a net profit of Rs 59.97 lakh in Fiscal 2023 as compared to net profit of Rs 21.69 lakh in Fiscal 2022. Meanwhile, its goal is to build long-term relationships with both existing and new clients. With existing clients, it aims to expand the nature and scope of its engagements by increasing the size and number of projects and extending the breadth of its service offerings. For new clients, it seeks to provide value-added services by leveraging its in-depth industry expertise and expanding the breadth of services offered to them.