VELS - Vels Film

📊 NSE: VELS 🏢 Entertainment / Electronic Media Software 📅 Last Updated: 12/14/2025 15:01

💰 Financial Performance

Revenue Growth by Segment

The company operates in a single segment: film production, distribution, and exhibition. Revenue for H1 FY26 was INR 1.35 Cr, representing a 90.54% decline compared to INR 14.32 Cr in H1 FY25. This volatility is inherent to the film industry where revenue is tied to specific project releases and licensing deals.

Geographic Revenue Split

Not disclosed in available documents, though operations are primarily centered in Chennai, Tamil Nadu, India.

Profitability Margins

Net Profit Margin for FY25 was 68.18% (INR 13.60 Cr profit on INR 19.95 Cr revenue), significantly bolstered by a one-time profit of INR 23.01 Cr from the sale of investments. However, for H1 FY26, the company reported a net loss of INR 3.54 Cr, resulting in a negative net margin due to high finance costs of INR 2.98 Cr and low operational revenue.

EBITDA Margin

Operating Profit before working capital changes for H1 FY26 was INR -2.20 Cr, a decline from INR -2.21 Cr in the previous period. Core profitability is currently pressured by the long gestation periods of films under production.

Capital Expenditure

The company invested heavily in content creation, with Work-in-Progress (inventory) increasing by INR 116.93 Cr during H1 FY26. Property, Plant, and Equipment stood at a modest INR 0.20 Cr as of September 30, 2025.

Credit Rating & Borrowing

Total borrowings as of September 30, 2025, reached INR 79.24 Cr (INR 39.53 Cr long-term and INR 39.71 Cr short-term). Finance costs for H1 FY26 were INR 2.98 Cr, implying an annualized interest burden that impacts net profitability.

⚙️ Operational Drivers

Raw Materials

Film production inputs including artist fees, technician salaries, and script acquisition costs, which collectively represent the bulk of the INR 220.99 Cr Work-in-Progress inventory.

Import Sources

Not disclosed in available documents; typically sourced domestically within the Indian film industry.

Key Suppliers

Not disclosed in available documents; typically involves individual artists, technicians, and production service providers.

Capacity Expansion

Current capacity is reflected in the movie production pipeline, which grew 112.38% from INR 104.05 Cr in March 2025 to INR 220.99 Cr in September 2025.

Raw Material Costs

Direct costs for H1 FY26 were INR 32.38 Cr, representing 2390% of the period's recognized revenue, as costs are capitalized into inventory (WIP) until film release.

Manufacturing Efficiency

Not applicable as a service/content provider; efficiency is measured by the ability to convert INR 220.99 Cr of WIP into revenue-generating releases.

📈 Strategic Growth

Expected Growth Rate

6.20%

Growth Strategy

The company is scaling its production pipeline, evidenced by a 112% increase in Work-in-Progress inventory to INR 220.99 Cr. It also executed a strategic disinvestment from Vels Studios and Entertainment Private Ltd, selling 45,00,000 shares at INR 61.14 each (totaling INR 27.51 Cr) to focus on core film production and distribution rather than studio infrastructure.

Products & Services

Production, distribution, and exhibition of films and motion pictures.

Brand Portfolio

Vels Film International Limited.

New Products/Services

Multiple films currently in production (WIP of INR 220.99 Cr) are expected to contribute to revenue upon release in subsequent quarters.

Strategic Alliances

The company reduced its stake in Vels Studios and Entertainment Private Ltd to 19.01%, transitioning it from a subsidiary to a minority investment.

🌍 External Factors

Industry Trends

The Indian services sector is seeing robust growth of 7.2%. The film industry is shifting toward a model where digital and satellite rights provide a significant cushion against box office volatility.

Competitive Landscape

Competes with other major film production houses in India for talent, screen space, and digital licensing deals.

Competitive Moat

The company's moat lies in its content library and production pipeline (INR 220.99 Cr WIP). This is sustainable as long as the company can consistently produce content that appeals to the domestic market.

Macro Economic Sensitivity

Sensitive to Indian GDP growth (estimated at 6.2% for industry) and services sector growth (7.2%), which drive discretionary spending on entertainment.

Consumer Behavior

Demand is driven by consumer preferences for theatrical vs. OTT content; the company's large WIP suggests a bet on continued high demand for new content.

Geopolitical Risks

Economic developments in India or globally and changes in government regulations are cited as primary external risks.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to government regulations, film certification norms, and tax laws which can lead to litigation or loss of reputation if violated.

Taxation Policy Impact

The company provided INR 5.10 Cr for current tax in FY25. Changes in tax laws are cited as a factor that could influence operations.

Legal Contingencies

The company identifies 'litigations' as a risk factor, though specific pending case values are not disclosed in the provided financial summaries.

⚠️ Risk Analysis

Key Uncertainties

The primary risk is the high concentration of assets in film Work-in-Progress (INR 220.99 Cr). If these films fail to perform, it could lead to massive impairments affecting over 70% of the company's asset base.