I am mainly invested in Phantom and my thesis is as follows-

Company- Full-fledged creative VFX studio, based in India with offices operating in US and Canada. As a TPN (Trusted partner network) Certified studio, PhantomFX offers a wide range of VFX services

Strengths-
1- Excellent at bidding for projects, bad bidding has led many studios out of business in past
2- Phantom has complete team for all projects incl. Labor intensive as well as Complex CG projects. Digikore does mostly labor intensive work.
3- Learning from production of Ayalaan movie will help mgmt do execute future such projects better. Other Indian VFX players don’t have such experience.
4- Bijoy as a CEO has good industry feedback. He focuses on helping Movie studios improve the quality while providing timely execution

Weaknesses-
1- >70% business comes from India which has bad payment cycle (receive money upto 6 months after movie release) compared to International business with much better payment cycle (10% at signing, 15% at 25% of work, 50% at 50% completion, and then everything else is delivered at 100% completion).But this can turn into opportunity as company is focusing on increasing its International business share to 70% of total business (like other Indian VFX players).

Triggers-
1- Success of Ayalaan movie, leading to payment of 17 crores and new contract from the KJR Studio worth 50 crores (to be executed by Dec’25)

Risks-
1- Next 2-4 quarters can be slow due to writers’ strike in US. Although it will be much slower for Basilic & Digikore as they have major business from US unlike Phantom.
2- Movie production can lead to huge inventory and bad debts
3- International studios setting shop in India instead of outsourcing to Indian VFX studios. 3 years down the line, business is expected to slow for Indian players
4- Medium term risk of AI taking away Roto/paint jobs from VFX players

Disclosue- Invested in Phantom, small position in Basilic. A lot of above mentioned points are based on feedback from VFX industry people and hence I can’t provide you with specific references. But I can say that VFX as an industry is still evolving and hence you can’t bet on any one name at the moment. That is why I am invested in both but Industry feedback is that Phantom is a much better business than Basilic/ Digikore.

For animation post production and visual effects services, the Indian Service Company is eligible for the incentive. Yes, it may so happen that foreign production houses may pay less taking the incentive into consideration. Non the less, it will help Indian companies to get more order, as they will become more cost competitive. And qualitative companies can very much withstand the pressure from foreign companies.

This benefit would be passed on to the foreign production houses. So, essentially vfx company don’t get anything but foreign production houses would be incentivized to give contracts to Indian vfx companies. This is what I get out of it.