# 1. Financial Performance ## A. Key Figures * Revenue: ₹55.5 Cr India standalone (+1.6x) · ₹109.5 Cr consolidated (+146%) * EBITDA: ₹38.7 Cr consolidated (+107%) · 20.3% margin * PAT: ₹26.8 Cr consolidated (+117%) · 14% margin * DSO: 92 days India (reduced by 98 days YoY) · 190 days prior year ## B. Revenue Growth * **Explosive Domestic Growth:** India standalone revenue surged to two-thirds of prior full-year levels, reflecting strong execution and market expansion. * **Overseas Integration Driving Scale:** Consolidated revenue growth fueled by overseas acquisitions and robust demand in international VFX markets. ## C. Profitability Trends * **Standalone Profitability Surge:** India business delivered a substantial improvement in PAT margin to **31%**, driven by higher utilization and overhead recovery. * **Consolidated Margin Pressure:** Despite strong earnings growth, consolidated PAT margin declined **189 bps** due to pricing pressures in overseas operations. * **Tax Efficiency Boost:** Lower consolidated tax rate (18–19%) reflects benefit from UK entity’s accumulated losses, enhancing after-tax profitability. ## D. Balance Sheet Strength * **Enhanced Financial Flexibility:** QIP raise of ₹85 Cr bolsters net cash surplus, enabling strategic investments in tech, delivery capacity, and M&A. * **Funding Growth Internally:** Strong surplus position supports next-phase scaling through organic and inorganic initiatives without near-term funding risk. ## E. Cash Flow Dynamics * **Receivables Timing Dragging OCF:** Negative operating cash flow of ₹17 Cr primarily due to **₹23 Cr increase in trade receivables** and project concentration in late September. * **Cash Flow Rebound Expected:** Excluding **₹29 Cr in "not due --- # 2. Order Book & Deal Wins --- # 3. Capacity & Utilization ## A. Key Figures * Average Project Size: £1.5 billion minimum · £5–7 billion maximum (direct contracts) * **Concurrent Project Capacity:** **5–6** projects (UK) · **35–40** projects (India) * **Revenue at Full Utilization:** **₹550–600 Cr** annualized (current capacity) ## B. Studio Expansion * **Enhanced Creative Leadership:** Addition of **Audrey Ferrara** as Art Director in London bolsters European creative talent pool and strengthens positioning for high-end feature film projects. * **Strategic India Network Growth:** Expansion into Bengaluru is operational, with team ramp-up underway to deliver **over 50 employees** this fiscal, enhancing offshore delivery capability. * **Policy Tailwinds:** State-level AVGCXR incentives across **seven key Indian states** reinforce Basilic Fly’s scalable, cost-efficient delivery footprint in India. ## C. Project Throughput * **High Throughput Model:** India studio enables significantly higher concurrent project volume versus UK, supporting diversified client execution and scale efficiency. * **Capacity Monetization:** Current resources can generate **₹550–600 Cr** in annual revenue at full utilization, providing clear line of sight to near-term revenue ceiling. ## D. Offshore Leverage * **Offshoring Execution:** Bengaluru team began project deliveries in **October 2025**, marking successful launch of offshore transition strategy. * **Cost-Arbitrage Advantage:** Offshore expansion strengthens ability to leverage **India cost advantage** for global high-end production, supporting margin resilience. --- # 4. Client & Revenue Mix ## A. Key Figures * **Artist Base:** **700+** across Chennai, Pune, London, Paris, and Vancouver * **Growth Pipeline:** Pursuing **25–30 organic opportunities** globally ## B. Key Clients * **Strategic Platform Partnerships:** Deepening collaboration with **Netflix** and **Amazon** on high-end Indian originals, with Netflix’s Hyderabad VFX center viewed as a collaboration opportunity rather than competitive threat. * **Global Business Expansion:** Leadership hires including **Adrian De Wet** (LA) and **Audrey, Marianne Speight** (London) significantly strengthen creative credibility and studio access in North America and Europe. * **High-Profile Client Engagement:** Major studios including **Warner Brothers, Disney, and Netflix** represent a substantial portion of revenue, with long-term engagements such as an eight-season Warner Brothers TV series underscoring strong client retention in streaming. * **Revenue Quality Advantage:** Overseas clients like Netflix and Amazon ensure timely payments, leading to superior receivables performance compared to domestic operations. ## C. Segment Contribution * **Hybrid Delivery Model:** Unique integration of Western creative leadership with Indian operational scale is a key differentiator driving client preference. * **Revenue Diversification Push:** Strategic move beyond film/TV into advertising and commercials to expand market reach and stabilize income streams. --- # 5. Technology & Integration ## A. Key Figures * **New Contract Wins from One of Us Integration:** **₹265 Cr** (H1 FY'26) * **Delivered Projects Value from One of Us:** **₹37 Cr** (H1 FY'26) ## B. Platform Development * **Creative Milestone Achieved:** *Shutter Bird*, with Basilic Fly as sole VFX partner, qualified for the Oscars, marking a major validation of artistic excellence and creative storytelling. * **Talent & Strategy Alignment:** Collaborative development of *Shutter Bird* reflects a strategic focus on nurturing emerging filmmakers to secure long-term industry relevance. * **High-End Differentiation:** Integration of Basilic Fly and One of Us positions the company at the premium end of the market, driven by scale, artistry, and advanced technical capabilities. * **Capability Expansion:** Strengthened upstream talent with addition of **five industry leaders** across India and overseas. * **Technology Roadmap Progress:** Phase 1 of tech integration completed in March 2025; Phase 2 advancing toward modular USD deployment by June 2026 to enable seamless India-London collaboration on complex digital assets. ## C. AI & Real-Time Tools * **Real-Time Collaboration Push:** Modular USD pipeline Phase 2 on track for end-FY'26/Q1 FY'27 completion, enabling real-time multi-site asset interoperability and global scalability. * **Industry Tailwinds:** Rising demand for high-end VFX across cinema, TV, gaming, and VR, supported by streaming platform re-engagement, UK/France tax incentives, and production volume growth. * **Tech-Driven Industry Shift:** AI, virtual production, and real-time rendering are accelerating the convergence of art and technology, reshaping the global VFX landscape. ## D. Cross-Site Collaboration * **Synergy Realized:** Full integration of One of Us achieved, delivering measurable commercial and operational benefits through cross-studio workflows. * **Strategic Studio Insights:** Ferrara’s expertise enhances understanding of major studio expectations, strengthening competitive positioning. * **Outsourcing Framework Emerging:** Potential for Hyderabad center to outsource to DNEG for South Indian projects, with DNEG leading project greenlighting and vendor coordination. * **Efficiency Focus Ahead:** Technology initiatives through June 2026 prioritize operational efficiency and collaboration, though no quantitative targets disclosed. --- # 6. Risks & Collection Challenges ## A. Key Figures * **Old Receivables Recovery:** **~₹8–9 Cr** collected (15–16% of ₹52 Cr) · **₹45 Cr** still outstanding * **Receivable Days:** **100–108 days** current range, with improvement expected in H2 FY26 ## B. Receivables Recovery * **Slow but Active Recovery:** Collection of old receivables progressing at a **slower than expected pace**, hindered by delayed production ramp-up at global studios post-strike. * **India DSO Improvement:** Despite seasonal build-up in receivables, standalone DSO shows **significant improvement** trend, indicating better collections discipline over time. * **H2 Recovery Outlook:** Management expects **gradual reduction in receivables** as new projects ramp from Q3, though **no firm timeline** provided for full recovery of outstanding ₹45 Cr. ## C. Pricing Pressure * **Margin Defense Strategy:** Overseas margin impact is limited; company is expanding business development to target **higher-priced niche projects** and offset pricing pressure. ## D. Client Concentration * **High Client Reliance:** **50% of current revenue** derived from Netflix, underscoring concentration risk mitigated by strong executive-level relationships and proven project execution. --- # 7. Guidance & Outlook ## A. Key Figures * **Revenue Guidance:** ₹550–600 Cr (FY '26, ex-acquisitions) * **2026 Revenue Target:** ₹400–450 Cr (revised from ₹500 Cr) * **Target PAT Margin:** ~30% consolidated (sustainable, near-term) * **Acquisition EV Range:** ₹250–400 Cr (under evaluation) ## B. Revenue Targets * **H2 Strength Expected:** Revenue performance anticipated to improve meaningfully in H2, driven by seasonal feature release cycles and new order contributions. * **Growth Moderation:** Full-year 2026 revenue outlook revised downward due to H1 softness, though trajectory remains positive with current operational scale. ## C. Margin Goals * **Margin Aspirations:** Targeting a sustainable ~30% PAT margin, supported by scaling and offshoring, though near-term expansion will be gradual amid ongoing investments. * **Project Upskilling:** Margin improvement hinges on winning more high-end, complex projects that leverage enhanced technological and creative capabilities. ## D. Strategic Expansion * **Acquisition Pipeline Active:** Engaged in discussions with 2–3 targets to expand into North America and diversify into immersive experiences and brand advertising; funding split between QIP proceeds and internal accruals. * **Capital Allocation Priorities:** Strategic growth and M&A remain top priorities; shareholder returns via dividends or buybacks under evaluation post-acquisition and revenue stabilization. * **Vision 2026–2027:** Focus on becoming an AI-enabled, multi-location creative leader through offshore scaling, technology integration, talent development, and global market expansion. * **Government Incentives in View:** Positive discussions underway on overseas IP-related incentives, which could provide future revenue uplift, though impact remains unquantified.