Basilic Fly Stud Q1 FY27 earnings call

Basilic Fly Studio reported consolidated revenue growth of 10% YoY, reaching INR 104 crores in Q1 FY27. However, consolidated EBITDA declined 23% YoY to INR 14 crores, with margins compressing by 584 bps to 13.91%. Consolidated PAT also saw a significant decrease of 44% YoY to INR 7 crores, resulting in PAT margins of 6.3%. This decline was primarily attributed to an unrealized FOREX loss of INR 4.2 crores, higher management travel expenses, increased IT expenses, exceptional severance costs of INR 2.9 crores, and increased depreciation from tech investments.

In contrast to the consolidated figures, the India standalone operations demonstrated robust growth. Revenue from operations increased by 28% YoY to INR 26 crores. Standalone EBITDA grew by 29% YoY to INR 11 crores, maintaining a stable EBITDA margin of 42%. Profit after tax for India standalone operations also increased by 17% YoY to INR 6 crores, with PAT margins at 20%, despite a 271 bps decline due to depreciation and tech investments.

During the quarter, Basilic Fly Studio delivered 89 projects, comprising 28 movies, 53 series, and 8 commercials, for 60 clients globally, including 10 new clients. The company secured new international orders worth INR 105 crores year-to-date for FY27, which represents 25% of its FY26 reported revenue, providing strong visibility. Furthermore, the active bid pipeline stands at INR 700 crores, with 40% of these opportunities in an advanced stage of conversion, indicating a healthy outlook for future revenue.

Basilic Fly Studio is actively pursuing an offshoring strategy to leverage the 30-40% structural cost advantage of its India-led delivery model. This involves migrating select roles from the UK and Europe to India and expanding its presence in Bengaluru. The company has already migrated 30-40 high-end roles and plans to establish a 150-seater physical facility in Bengaluru, with operations starting from October. These initiatives are expected to drive durable margin expansion, with full materialization anticipated by the end of FY27.

The company is investing in its technology foundation, including a unified data center strategy and a dedicated AI excellence team to research next-generation initiatives. Key tech updates include integrating ComfyUI into its pipeline and transitioning to owned NetApp infrastructure. These efforts aim to improve collaboration, data management, and operational efficiency. The Chennai and Pune facilities received the prestigious 'TPN Stella Award,' reflecting robust security frameworks and world-class standards.

Management highlighted a vibrant industry landscape, with India's animation and VFX sector projected to reach US$2.2 billion by 2026. The global film industry is recovering, with the 2026 box office forecast at US$35 billion, and significant investments are flowing into the Middle East for entertainment assets and creative technology. These macro trends, coupled with the company's strong bid pipeline and strategic initiatives, position Basilic Fly Studio for continued growth, with H2 FY27 expected to be stronger than H1.

Basilic Fly Studio is in advanced stages of evaluating a strategic acquisition, specifically targeting a profitable North American company with a complementary setup. This acquisition aims to enhance creative capabilities, open new markets, and contribute positively to both top and bottom lines. The company plans to fund this acquisition entirely through its existing cash reserves, which include INR 37 crores from unutilized QIP proceeds and INR 21 crores from unutilized IPO proceeds, largely held in fixed deposits.