The company is a 500-member VFX studio based in Chennai with offices in Pune, London, and Vancouver.
They will soon open new offices in Hyderabad and Salem to increase team size to 800-1000 over the next couple of years.
They have worked with Apple, Marvel, Paramount, Warner Brothers, Netflix, and such reputed studios.
VFX outsourcing is booming as western media giants want to cut costs amid a talent crunch, high inflation, and recession. Domestic demand is also increasing due to increasing consumer demand for more graphic heavy movies.
The overhang of Hollywood writer’s and actor’s strike is over. This is great for the company as currently all their sales are from foreign customers.
They plan to increase focus on Europe, Australia, and South Korea to reduce dependence on Hollywood.
They plan to launch a 40-45 episode of Kid’s entertainment show for diversification and consistency of revenue.
Management guidance is 60% growth in sales with operating margins of 40%+.
Their margins are higher than Phantom FX because they are not present in the domestic market.
Management is using AI tools to reduce workload and improve productivity.
There will be multiple winners in this sunrise industry. Both major listed players – Basilic Fly and Phantom FX are available at under 25 PE.
Risks:
If there is a slowdown in the US and China, Hollywood budgets will come under strain. They might pressurize our company to lower prices.
As and when company starts taking up domestic projects in a major way, it will become resilient. But margins will contract.
AI is revolutionizing every tech related field. We must track the impact of AI on such companies and whether they are able to take advantage of it or become redundant in the process.
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