Basilic Fly Studio Ltd

Stock Opportunities Untested - but worth a good look
62

Contrary to others, govt initiative might be negative for existing companies since new players will come and margin will contract for existing player and that is the reason that all vfx companies are going down.

Happy to hear thought of other VP members on this

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63

63 cr receivables on 100 cr sales shows poor bargaining power. Very hard to correct as customers get used to easier credit terms

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We have to accept this risk as this is industry wide.
As mentioned in concall:
One client have stress and agreed to instalments for 15cr. Temporary requirement due to market downside in North America. Steady state receivables will be 90 to 180 days.

D: Invested

65

63 -15 = 48 out of 100 still too large for my comfort.

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66

Do you guys think AI platform like Sora and others can become a future threat to VFX companies like BFS and others ?

I think in 5-10 years text to video generation platforms will mature and can easily do the same work in less than half or fraction of cost.

I also tried to find any questions related to this in concall but unable to find anything.

67

Basilic has fallen around 27% from the peak. Has the investors completely lost trust in management?
I am still very bullish on the VFX sector but it seems like every VFX company is falling right now.

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brijyot_chawla Agree with you. From Highflier to dusted due to result error, which obviously cause concern about management integrity.
However, stock is under pessimism due to:

  1. Concerned Management integrity.
  2. Competition in VFX Field.
  3. AI threat ( In my understanding it is perceived, Any field always have threat related to new technology)

Future triggers:

  1. As guided, 30 to 50% revenue growth with similar margin.
  2. New aquation/partnership.
  3. Acceleration on order book from current 75 cr.
  4. Management proves integrity by demonstrating that they are clean and fair.
  5. If we see growth and integrity coming in few results, valuation is very supportive. TTM PE is 20. Where growth expected is 40%.
  6. Government support which is announced.

In Nutshell, management has to demonstrate growth and integrity.

D: Invested.

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69

Thanks for sharing your thoughts. I completely agree to your perspective, the biggest threat I see is management integrity. Even before this results fiasco, what I have observed is the CEO does not have a full grip on the company, majorly on the financial side of things. He is great when it comes to VFX tech side and what is happening currently, however, I would expect my CEO to have full grip in entire company and have vision about how company would look like in next 3 years which seems to be missing.
However, saying that I still believe it was a genuine mistake (I could be biased when I say that), but they have totally lost investors confidence now.

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70

BFS stock price has increased ~20% in last 5 days, does anyone know what is going on? Cannot find any news or announcements around it.

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71

Company acquired One Of US Limited, UK based VFX company by 70% shares, however value is not disclosed.
Turnover as of 31 Dec 2023 was 29.42 Million GBP, EBIDTA -2.2 Million GBP.
https://nsearchives.nseindia.com/corporate/BASILIC_29072024181105_DisclosureasperRegulation30Signed.pdf
Looks like distress sale as company was in loss, if turnaround, can be good asset, as they have 300 seats and access to industry.

One of US Limited:
We are a visual effects studio with a focus on design and collaboration, founded in London in 2004 by co-directors Rachael Penfold, Dominic Parker and Tom Debenham. Working across film and TV, and with experience in all stages of production, from concept through planning, photography and post-production, One of Us is an essential studio for visual effects and related work. With approved vendor status, capacity and infrastructure for 300 artists, we are expanding into ever more ambitious and exciting projects.

D: Invested

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72

Is BFS still worth adding to the portfolio after continuous upper circuits?

73

bro, where’s the ebitda figure in the document?

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HarshVijay
You can find from below link where One Of Us filed document to UK government in April 2024. The loss was mainly due to movement of London studio and investment in redundancy, strategic hiring, wage hike in London and technical spend.

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Gautam58
You need to decide yourself. I have estimated to double earning in next two years.

Additionally come across below article, which throw more light on partnership.

D: Invested

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75

Thanks Dharmesh for sharing it. Out of curiosity, what are the factors that you think would help BFS double there revenue in next 2 years?

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saw this on linkedin. Good to see basilic hiring , inspite of adding 300 employees in one of us acquisiton. looks like they are posied for growth.
Disc- Invested

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they are hiring seasoned compositor, track artists.
Disc- Invested

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brijyot_chawla

As management informed in concall, Growth of less then 30% by sep 2024. After that sept to March 2025 growth of 50%. In addition, One of US acquisition where they have 300 Artist. Hollywood strike finished. One more thing I am positive about cost of good VFX in developed world is 4 times then in India, so they have to come to India to reduce their cost.

D: Invested

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79

Managing Director & CEO’s Letter

  • Financial Performance: Achieved significant growth with total income reaching ₹105.79 Cr, a YoY growth of 33.75%.
  • Strategic Milestones: Surpassed the ₹100 Cr revenue mark, highlighting the company’s robust growth trajectory.
  • Global Expansion: Expanded presence with new offices in Eastern Europe and South Korea, and a recent acquisition in the UK.
  • Technological Advancements: Continued investment in AI and real-time rendering technologies to enhance service offerings.
  • Client Base: Expanded globally, serving clients from offices in Chennai, Pune, London, and Vancouver.
  • Future Outlook: Optimistic about sustained growth driven by strategic initiatives and market expansion.

Management Discussion and Analysis

  • Industry Overview:

    • Global VFX Market: Valued at US$ 10.0 billion in 2023, projected to grow to US$ 18 billion by 2032 (CAGR of 6.7%).
    • Demand Drivers: Increased demand for high-quality visual effects in films, TV shows, advertisements, and digital media.
    • Streaming Platforms: Growth driven by the proliferation of streaming services and digital media channels.

  • Operational Highlights:

    • Revenue Milestone: Surpassed the ₹100 Cr mark in total revenue.
    • Team: Approximately 500 members catering to clients worldwide.

  • Strategic Initiatives:

    • Technological Investments: Focus on AI and real-time rendering.
    • Market Expansion: Entered new markets in Eastern Europe and South Korea, and acquired a company in the UK.

  • Future Prospects:

    • Growth Potential: Significant growth potential due to technological advancements and international market expansion.
    • Challenges: Persistent global inflation and high government debt could pose challenges.

Tax Incentives:

  1. France:
  • Tax Rebate for International Productions (TRIP): France offers a 30% tax rebate on qualifying expenditures incurred in the country for international productions.

​ This rebate can increase to 40% for VFX-related expenses exceeding a certain threshold. Projects must meet specific criteria, including shooting days in France and expenditure on French services.

  1. United Kingdom (UK):
  • Indie Tax Credit: The UK government introduced a 40% tax relief for films with budgets up to £15 million to support the domestic production sector.

​ This relief aims to boost the independent film industry.

  • Visual Effects Tax Credit: Starting in April 2025, visual effects will see a tax credit increase to 39% in the UK.

​Additionally, there will be a 40% relief on business rates for studio facilities in England to support the VFX industry.

​
3. India:

  • Government Incentives: India provides incentives such as cost reimbursements up to 30% to attract foreign collaborations and boost competitiveness in the VFX industry.

Access full report: https://www.nseindia.com/get-quotes/equity?symbol=BASILIC
​
D: Invested.

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80

Thanks for posting this, did BFS share quarterly results? I was under the assumption BFS would share half yearly in November.

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81

There is a lot of volatility with BFS price, it moved up to 50% in past month and has now shedded all of it’s gain. Does anyone know of any news/event or this seems to be profit booking?

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