Basilic Fly Studio Ltd

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.