I think management is trying to play ‘better safe than sorry’ here. From my understanding, they started out with 20-25% growth guidance and at one point, they said they may beat it and touch 50% as well.
Due to uncertainity in the last year, management has learned in this industry, things may not be as certain as they seem, so they are playing safe. This is good for the investors as well. I have held stocks where management used to give shiny projections only to later miss it by a huge mark. Markets punish such companies strongly.
To be honest, I am more concerned about the receivables than earnings growth in this industry. I hope what management mentioned in this concall that they are getting back on track regarding this is true and we see improvement on this front in coming quarters. This is something I will track like a hawk and take further decision.
I see a lot of comments of receivables being shot up, it’s 51cr for 2024. Could someone point out what thresholds should we consider as high for it? Is it revenue to receivables or are you tracking some other ratio?
According to the 2023 Annual Report, PhantomFX recognizes revenue in the month of raising the invoice. In the earnings call, the management mentioned that the company billed ₹11 crore in January, ₹15 crore in February, and the remaining amount in March. However, the reported revenue for Q4 FY24 is ₹23.03 crore, derived as follows:
Total H2 FY24 Revenue: ₹49.20 crore (mentioned in the May 30 earnings call)
Less Q3 FY24 Revenue: ₹26.17 crore (mentioned in the March conference call)
Resulting Q4 FY24 Revenue: ₹23.03 crore
The combined total billing for January and February alone is ₹26 crore, which exceeds the reported Q4 revenue. Where is the discrepancy in my calculation?
Probable answer is uncertainty. All vfx companies going through this phase of high receivables. Unless this gets clear out, probably it will remain in range bound.
Plus technicals also not supporting it.
Disc: dont hold any position, thoughts can be biased.
Haven’t the management given the clarification already? All of them are saying there receivables time is still 90-120 days, this receivables accounted for Feb and March as well. Even BFS was down but it seems like it is picking up now, but Phantom still is pretty low.
Updates from Company Linked in posts since Last week:
Company has recently posted on LinkedIn that their involvement in “Kalki 2898 AD” movie and “Indian 2”.
Disclaimer: But majority of work for Kalki movie was done from DNEG a London based company.
Indian 2 has very less Visual effect as compared to movie Kalki.
Also I can see lot of Job posts in their company profile, Which could mean company is again looking at expansion.
Can someone please comment on the higher trade receivables and negative cash flow from operations? Specifically, interested in understanding if this is common with the film industry. It seems concerning that an increase in sales doesn’t translate into generating enough cash
This is common in VFX industry because the companies that can afford to use VFX are few like large studios, major OTT platforms and that gives them substantial bargaining power over supplier payments.
Usually VFX companies have to bid for a project based on initial scope and then there is a lot of reworks based on client satisfaction (usually without pay) and until the studios greenlight the VFX, there is no payment. Note: This is from my understanding by reading, studying the vfx industry. Experts can chime in here.
Hence, why many prestigious studios like Tippett Studio are going out of business. Tippett had to be acquired by Phantom
Does anyone know why Basilic Fly Studio(CMP 610) getting higher multiples than Phantom, And also we have seen recent spike in Basilic Fly Studios as there was no such big news.
Multiples are almost 60% compared to Phantom from current price of 440.
Also does anyone have updates on Investors meet con call updates?
Hi
I was checking the employee count for phantom on epfo.
In last month the employee count has decreased by 20%.(basilic down 10%)
That is a significant layoff.
there was no mention of these in Q4 concall.so I guess it was not due to productivity gains as mentioned in the update today.
Layoff indicate that companies expect pain to continue in near term.
Bassilic has higher focus in Europe(Almost 100% export) while phantom has 50% revenue from India and 50% from export.The revenue from India gets delayed often.
“Unfortunately, however, Axis has more recently been impacted by a decline in customer projects, as well as increases in labour costs which have resulted in severe cash flow problems. The directors worked tirelessly to explore alternative solutions, but ultimately had to take the difficult decision to seek the appointment of administrators.”
Increased labour costs is a good sign for Phantom but the decline in customer projects is not.
“There are rumours in the market that many films that were to go on floors have folded up.”
‘Ranbir Kapoor has only one film as does Salman Khan.’
‘Hrithik Roshan only has War 2 in hand.’
‘Ranveer Singh has no film on floors today.’
The sector does not seem to be in the pink of health, Tippett Studio got acquired, DNEG lays off people, Axis Scotland shuts down, rumours of Bollywood not doing great.
The demand for content surged during COVID, then came the strikes, studios suffer and wonder how it’s going to unfold in the coming months.
I was earlier an investor in Phantom and then switched to Basilic.
I think the reason why Basilic is getting higher PE is the same reason what made me switch.
A lof of investors here shrugged off Phantom’s decision to gamble on Ayalaan. But to me this was a very high degree of indiscipline. The fact that the management doubled down on their decision made me realize they don’t see their mistake. They are not in the business of deciding what is ‘good content’ and shouldn’t use their money to do so.
The second reason is the belief that Indian customers (studios) are unreliable pay masters vs foreign studios. Hence the company with higher exposure to foreign business is considered a better business.
I am not trying to reopen the debate on whether Phantom’s decision was good or not. I think everything that had to be said has been said by both sides. Just sharing why I give it a higher valuation personally.
That thought occured to me as well, but never bothered to make the switch from phantom to Basilic.
I think I’ll wait for the numbers to come out, and at any point in time, I see numbers of basilic vastly better in than phantom, interms of growth rates. Then I may.
Coz at this point in time, phantom offers slightly better valuation comfort.
Though on hindsight one would have been better off to make the switch from phantom to Basilic a couple of months ago.
The key outcomes from the report dated August 12, 2024, regarding Phantom Digital Effects Limited are as follows:
Financial Results:
The company reported its unaudited standalone financial results for the quarter ended June 30, 2024.
Revenue from operations for the quarter was ₹2,612.18 lakhs, showing an increase from ₹2,365.46 lakhs in the same quarter the previous year.
The total income for the quarter was ₹2,678.82 lakhs.
The company achieved a profit before tax of ₹853.71 lakhs, up from ₹808.10 lakhs in the same period last year.
The net profit for the quarter stood at ₹621.46 lakhs, compared to ₹605.89 lakhs in the previous year.
Change in Key Personnel:
The company accepted the resignation of Ms. Pallavi Toniga from the position of Company Secretary and Compliance Officer, effective from August 18, 2024.
Ms. Poornima Raghu was appointed as the new Company Secretary and Compliance Officer, effective from August 19, 2024.
Annual General Meeting (AGM):
The 8th AGM of the company is scheduled to be held on September 19, 2024, at 11:00 A.M. through video conferencing/other audio-visual means.
Subsidiary Incorporation:
During this quarter, the company incorporated a wholly-owned subsidiary named Spectre Post Private Limited.
