Hello Sir,
Hope you are doing well.
In Oct’22, Phantom Digital Effects listed in the market.
It’s a a full-fledged creative VFX studio.
Indian animation and VFX industry is now a back office of the world and reported 57% growth in 2022, as per FICCI-EY.
Considering the fast paced growth of the industry and the potential for Indian players to collaborate with International studios and OTT platforms, we decided to look at the company in some detail. Below, we have shared notes from Q2 FY 24 con-call of the company.
Before that, a few days back, we released our new stock recommendation for our Alpha and Alpha + Members
Company’s main growth and profit driving segment has grown more than 10x in terms of sales and profit in the last 10 years. We believe it has the potential to double its PAT in the next 3 yrs
For details on the stock click HERE
Phantom Digital Effects – Notes from Q2 FY 24 con-call
– About the company
- Commenced in 2011, Phantom Digital Effects boasts over a decade of experience in the creative realm of visual effects industry
- Positioned at the forefront of India’s creative VFX service providers, we hold a prestigious TPN certificate
- We provide comprehensive services, cover a spectrum of capabilities, including final shot compositing, 3D element creation, life-like creature and environment designs, and many more for commercials, feature films, and web series, helping them at pre-production, production, and post-production phase
- We have successfully delivered over 250 projects and 3,000 shots, earning approved vendor status from esteemed content providers like Amazon, Walt Disney, and Netflix
– Business Update
- In H1 FY24, We signed a groundbreaking deal with a major OTT. This momentous agreement is worth a minimum of INR1,200 million to be executed over four years
- Our international revenue mix increased from 26% in H1 FY23 to 32% in H1 FY24. With plans to further shift this to 70%
- To meet the growing demand, we have expanded our studio space. We have expanded our Chennai studio by 13,200 sq. ft., bringing the total space to 35,000 sq. ft
- Looking ahead, we are planning to enter into animation and gaming business segment that will position us to serve a broader spectrum of industry
- Current revenue structure, most of the revenue comes from movies I would say in the range of 70% to 80% followed by OTT and then commercials…OTT would be about maybe roughly around 10% to 15%
– International expansion
- We have already hired a few people in US and we are in the process of hiring people in UK as well. So, it will be a very small number
- Over the period of time when we are getting into more of international business and more of triple-A kind of films, so that margin will definitely increase drastically
– Usage of AI
- We are trying to build some systems where we can reduce this manual work and get it done by AI
- We have started using AI in rotoscopy which is a process-oriented work
- We have already started using AI even in the concept stages. Certain concepts are being drafted initially by AI and then our artists are taking forward from there
– Some recent projects
- We worked on this movie called Leo where we created a complete car chase sequence
- We are also working on a film called Ayalaan where we are creating aliens and space ships and all the alien world
- We recently worked on a TV series called Kaala Paani, which released on Netflix
– Guidance
- We expect the year over increase to be in the range of 75% to 80%, which means that we could look at a top line of around INR 90 crores to INR 100 crores for FY24
- I think FY25, we are looking at anywhere between INR 135 crores to INR 150 crores of top line. And we expect EBITDA margins to remain at the 35% to 40% level. And PAT margins of around 25% to 30% at this point of time
(End)
Disclaimer: This is not a recommendation to buy/sell Phantom Digital Effects. The securities quoted are for illustration only and are not recommendatory.
Best Regards,
Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.
SEBI Research Analyst Registration No. INH100001690
Research Analyst Details
Name: Ekansh Mittal Email Id: [email protected] Ph: +91 727 5050062
Details of Associate: Not Applicable
Analyst Certification: The Analyst certify (ies) that the views expressed herein accurately reflect his (their) personal view(s) about the subject security (ies) and issuer(s) and that no part of his (their) compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report.
Disclaimer: http://www.
Address – 7, Panch Ratan, 7/128, Swaroop Nagar, Kanpur – 208002, Contact No. – +91-7275050062
Compliance Officer – Mr. Ekansh Mittal, +91-9818866676, ekansh@
Grievance Redressal – Mittal Consulting, grievances@
“Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors”.
“Investment in securities market are subject to market risks. Read all the related documents carefully before investing.”
The views expressed are based solely on information available publicly and believed to be true. Investors are advised to independently evaluate the market conditions/risks involved before making any investment decision
This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. Ekansh Mittal/Mittal Consulting/Katalyst Wealth is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your information and should not be reproduced or redistributed to any other person in any form. This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Ekansh Mittal or any of its affiliates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Neither Ekansh Mittal, nor its employees, agents nor representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. Ekansh Mittal/Mittal Consulting or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement.
The recipients of this report should rely on their own investigations. Ekansh Mittal/Mittal Consulting and/or its affiliates and/or employees may have interests/ positions, financial or otherwise in the securities mentioned in this report. Mittal Consulting has incorporated adequate disclosures in this document. This should, however, not be treated as endorsement of the views expressed in the report.
We submit that no material disciplinary action has been taken on Ekansh Mittal by any regulatory authority impacting Equity Research Analysis.
Disclaimer: You can access it here – LINK
Whether the research analyst or research entity or his associate or his relative has any financial interest in the subject company/companies and the nature of such financial interest – No
Whether the research analyst or research entity or his associates or his relatives have actual/beneficial ownership of 1% or more securities of the subject company (at the end of the month immediately preceding the date of publication of the research report or date of the public appearance) – No
Whether the research analyst or research entity or his associate or his relative has any other material conflict of interest at the time of publication of the research report or at the time of public appearance – No
Whether it or its associates have received any compensation from the subject company in the past twelve months – No
Whether it or its associates have managed or co-managed public offering of securities for the subject company in the past 12 months – No
Whether it or its associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past 12 months – No
Whether it or its associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months – No
Whether the subject company is or was a client during twelve months preceding the date of distribution of the research report and the types of services provided – No
Whether the research analyst has served as an officer, director or employee of the subject company – No
Whether the research analyst or research entity has been engaged in market making activity for the subject company – No