Phantom Digital — Q2 FY26 earnings call

Call held 24 Nov 2025

Management summary

Phantom Digital Effects Limited reported robust financial performance for H1 FY26, driven by significant growth in consolidated income, EBITDA, and net profit, largely attributed to successful integration of recent acquisitions like Milk Visual Effects and Tippett Studio. The company is strategically leveraging its global footprint and in-house AI tools to enhance productivity and expand market reach, while also addressing receivables management and planning for main board migration.

Highlights

  • Total consolidated income grew 140.93% YoY to ₹84.98 crores in H1 FY26, up from ₹36.65 crores in H1 FY25.

  • EBITDA increased to ₹28.62 crores in H1 FY26 from ₹16.32 crores in H1 FY25, with a margin of 32.41%.

  • Net Profit rose to ₹20.68 crores in H1 FY26 from ₹8.27 crores in H1 FY25, achieving a margin of 23.43%.

  • EPS grew to ₹13.87 in H1 FY26 from ₹6.09 last year.

  • The company reported an order book of ₹201.32 crores as of October 2025, complemented by a bidding pipeline of ₹817 crores, providing strong visibility for upcoming quarters.

Concerns

  • Outstanding receivables as of November 19, 2025, stood at ₹61.49 crores, with ₹18 crores identified as older than 180 days.

  • Management was unable to provide immediate details on the calculation of goodwill related to acquisitions or the consolidated Days Sales Outstanding (DSO) during the call.

Key financials

  1. Total Consolidated Income ₹84.98 Cr +140.9%YoY
  2. EBITDA ₹28.62 Cr +75.4%YoY
  3. EBITDA Margin 32.4%
  4. Net Profit ₹20.68 Cr +150.1%YoY
  5. Net Profit Margin 23.4%
  6. EPS ₹13.87 +127.8%YoY

What they filed

Q2 FY26: revenue up 143.2%, net profit up 16.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ1 FY24Q2 FY24Q3 FY24Q4 FY24Q1 FY25Q2 FY25Q4 FY25Q2 FY26
Revenue24 17 26 22 26 +10%35 +101%64 +146%54 +143%
EBITDA9 7 12 10 10 +14%15 +125%22 +84%12 +17%
Net profit6 4 8 6 6 +2%8 +84%12 +54%7 +17%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • M&A Milk Visual Effects (including Lola Post) Acquisition · Integrated · Consideration $10 Mn

    Addition of a culture of excellence, Europe's most respected creative studios, admired for artistry, technical depth, and contribution to high-value global content. Strategic access to mature European markets.

    First tranche paid, share certificates issued, Phantom holds full ownership. Total consideration of $10 million, including $7.5 million for acquisition and $2.7 million for working capital infusion. Payments on trench basis, liabilities to be closed by December 1st tranche.

    One of the most significant milestones of the year has been the acquisition of Milk visual effects and it's boutique brand. Lola post. I'm pleased to share that the first tranche has been paid. The share certificates have been issued and Phantom now holds full ownership. But more importantly, this is not just a transaction, it is the addition of a culture of excellence that Milk and Lola have built over decades. These are among Europe's most respected creative studios, admired for their artistry, technical depth and contribution to high value global content. ... Milk acquisition is $7.5 million including the liabilities which they are holding it. OK. So, 2.7 million which we are expecting as an infusion of the working capital for them. So, it's total of 10 million which we are expecting. So now there was a deferred payments which we are processed so the first trench of payment has been released and we are officially owner of Milk. Yeah, so that the payment will be on the trench's basis. So, we'll be closing that liabilities by December 1st trench of it and the 2nd trench 3rd trench will be followed.
  • M&A Tippett Studio Acquisition · Integrated

    Integration complete across operational and creative functions, giving Phantom access to a Hollywood legacy and direct engagement with Premier Western clients.

    Approximately ₹13 crores of the purchase consideration is still pending, to be released in three phases (December, June, and next December).

    Another important milestone this year was the formal completion of our acquisition of Tippett Studio in June 2025. The integration is now complete across operational and creative functions... It's basically around 13 crores is pending. So, which we will be releasing by this December as well as June and December next December 3 phase, it will be happening, yeah.

Guidance & targets

Revenue

  • Consolidated Revenue Revenue · FY26 · High confidence ₹240 crores
    It's, we are projecting around 240 crores including the Milk. So that's what the projection as of now it's very conservative. We planned for 160 crores is the Phantom including of Tippett. So now Milk is coming into the picture from October effective. So, 80 crores we are expecting from the Milk and we will close it to 240 very conservatively, this number is consolidated.

    — Anantharaman S

  • Consolidated Revenue Revenue · FY27 · High confidence ₹300-350 crores
    We are expecting around the 300 to 350 crores which we are expecting at in the coming year.

    — Anantharaman S

Profitability

  • Consolidated EBITDA Margin Profitability · Coming year (post-integration) · High confidence 44%
    OK. OK. On the consolidation basis, we are looking on 44% of EBITDA and 25% conservatively PAT.

    — Anantharaman S

  • Consolidated PAT Margin Profitability · Coming year (post-integration) · High confidence 25%

    — Anantharaman S

  • Consolidated Margin Profitability · Two years · Medium confidence 30-32%
    Expect that in a two year's time we should reach by 30 to 32%.

    — Anantharaman S

Operational

  • Main Board Migration Operational · December or first week of January · High confidence Complete
    So, the companies in process to migrate from SME to main board. So we are already in process, so hardly maybe by December or first week of January we'll come with main board.

    — Rajesh Samal

  • Gaming Division Launch Operational · Before February · High confidence Complete
    Probably by before February we'll be able to complete it.

    — Bejoy Arputharaj

What to watch in Q3 FY26

Main Board Migration Status

next quarter
Current In process, expected by Dec/Jan
Target Migration complete

Why it matters

Successful migration to the main board could enhance the company's market visibility and liquidity.

So, the companies in process to migrate from SME to main board. So we are already in process, so hardly maybe by December or first week of January we'll come with main board.

Risks & concerns

  • High Outstanding Receivables

    medium

    Outstanding receivables as of November 19, 2025, stood at ₹61.49 crores, with ₹18 crores identified as older than 180 days. Management is implementing stronger integration and centralized follow-up mechanisms to improve collection.

    Additionally, we collected 19.53 crores against H1 FY26 sales of 47.11 crores achieving a 41.5 percentage collection rate. As a result, the current outstanding receivables as of 19th November stands at 61.49 crores. This performance stands as a positive indicator of market revival. However, with stronger integration, centralised follow up mechanisms and the shift towards 90 day collection cycles, we are already seeing tangible improvements. We expect this trend to strengthen further and investors can expect a more predictable and steady cash flow profile in the quarters ahead.

    Management acknowledged

  • Difficulty in Gaming Segment Acquisition

    low

    The company initially planned to acquire a small gaming company but found it difficult to find suitable targets, leading to a shift towards developing an in-house gaming division.

    We initially had a plan to acquire a small company, but that's you know we are having a small hiccup finding very good companies here. So, you know we are doing some small initiative on our end performing a small team and we'll be starting up a small gaming division within Phantom itself.

    Management acknowledged

Q&A highlights

7 direct, 1 evasive
AI Strategy and Use Cases Direct
AI is a tool for VFX, not a replacement. Improves productivity. Traditional work takes months, now weeks. AI for complete commercials, pre-visualization. Not for high-value commercials or fantasy elements in films. AI has limitations, but helps clients with limited budgets.

Clarifies management's approach to AI, emphasizing its role as an efficiency tool and market expander for budget-constrained clients, rather than a direct replacement for traditional VFX or high-end film production.

Asked by Achuth

Consolidated Revenue and Margin Projections Direct
We are projecting around 240 crores including the Milk... We are expecting around the 300 to 350 crores which we are expecting at in the coming year. ... On the consolidation basis, we are looking on 44% of EBITDA and 25% conservatively PAT.

Provides specific forward guidance on consolidated revenue for FY26 and FY27, as well as target EBITDA and PAT margins post-integration, which are key financial metrics for investors.

Asked by Achuth

Global Integration Challenges and Solutions Direct
Tippett integration complete. Pipeline and toolsets developed. Already worked with international artists. Shared files/data between Indian offices. Successfully implemented across global offices. New HRs recruited for different timelines. Restructured organization, reporting system. Shared learning methodology system deployed globally.

Addresses concerns about integrating diverse global entities, detailing the operational and cultural strategies implemented to ensure seamless collaboration and knowledge sharing.

Asked by Aditya Bhutra

Main Board Migration Timeline Direct
So, the companies in process to migrate from SME to main board. So we are already in process, so hardly maybe by December or first week of January we'll come with main board.

Provides a clear timeline for a significant corporate action that could enhance the company's visibility and liquidity in the market.

Asked by Aditya Bhutra

Receivables Management and Funding Strategy Direct
We are tagging our credit policy so going forward also we'll also have a positive, you know collection from this side also. And so far, relating to the QIP part, whatever the you know proceeds that's being utilised after the objectives which is already mentioned in the document. So, relating to that, relying more on the external funds. So, we are also in process to you know strengthening the credit policy. So that will have a positive impact in the cash in going forward.

Clarifies the company's strategy to improve cash flow and reduce dependence on external funding by strengthening credit policies, directly addressing a concern about outstanding receivables.

Asked by Simran Melath

Milk Acquisition Payment Details Direct
Milk acquisition is $7.5 million including the liabilities which they are holding it. OK. So, 2.7 million which we are expecting as an infusion of the working capital for them. So, it's total of 10 million which we are expecting. So now there was a deferred payments which we are processed so the first trench of payment has been released and we are officially owner of Milk.

Provides a detailed breakdown of the Milk acquisition cost, including working capital, and confirms the payment structure and ownership status, offering transparency on a key M&A event.

Asked by Vikas

Tippett Acquisition Pending Payments Direct
It's basically around 13 crores is pending. So, which we will be releasing by this December as well as June and December next December 3 phase, it will be happening, yeah.

Clarifies the remaining financial obligations for the Tippett acquisition and the timeline for these payments, which impacts future cash outflows.

Asked by Mahesh

Goodwill Calculation and Consolidated DSO Evasive
This I will get back to you. I'm not having the calculation right now in my hand. I'll get back to you. Mahesh on this. Yeah. ... We'll get back to you on that number. Yes. Yes.

Management was unable to provide immediate details on key financial metrics (goodwill and consolidated DSO), indicating a potential lack of readiness or transparency on these specific items.

Asked by Mahesh

3 min read 7 chapters

Detailed narrative

Robust H1 FY26 Financial Performance

Phantom Digital Effects Limited delivered strong financial results for H1 FY26, with total consolidated income surging by 140.93% year-on-year to ₹84.98 crores. EBITDA increased to ₹28.62 crores, achieving a healthy margin of 32.41%. Net profit also saw significant growth, reaching ₹20.68 crores with a margin of 23.43%, and EPS improved to ₹13.87 from ₹6.09 in the prior year, reflecting the benefits of recent acquisitions and operational efficiencies.

Strategic Acquisitions and Global Integration

The company successfully completed the integration of Tippett Studio in June 2025 and acquired full ownership of Milk Visual Effects (including Lola Post) with the first tranche paid. These acquisitions have expanded Phantom's global footprint across Europe and North America, complementing its strong Asian presence. The formation of Phantom Media Group (PMG) as an umbrella brand aims to unify operations and strategically position the company as a global creative technology group, leveraging the distinct strengths of each studio.

AI Integration for Enhanced Productivity

Phantom Digital is actively integrating in-house developed AI tools into its VFX pipeline to boost productivity and efficiency. These AI applications are primarily used for pre-visualization, commercials, faster asset creation, de-ageing, and face replacements, significantly reducing repetitive tasks. Management emphasized that AI serves as a tool to augment creative processes and expand market opportunities for clients with limited budgets, rather than replacing traditional VFX artists or high-end film production.

Receivables Management and Cash Flow Outlook

As of November 19, 2025, outstanding receivables stood at ₹61.49 crores, with ₹18 crores classified as older than 180 days. The company collected ₹19.53 crores against H1 FY26 sales of ₹47.11 crores, representing a 41.5% collection rate. Management is implementing stronger integration and centralized follow-up mechanisms, alongside a shift towards 90-day collection cycles, to improve cash flow predictability and collection rates in the coming quarters.

Strong Order Book and Bidding Pipeline

The company reported a robust order book of ₹201.32 crores as of October 2025, with nearly 80% originating from international projects. Additionally, a significant bidding pipeline of ₹817 crores provides strong revenue visibility for the upcoming quarters. This robust pipeline, combined with the contributions from integrated studios, is expected to drive solid growth for both standalone and consolidated operations in FY25 and FY26.

Main Board Migration and Gaming Segment Expansion

Phantom Digital is in the process of migrating from the SME platform to the main board, with completion anticipated by December 2025 or the first week of January 2026. Furthermore, the company is expanding its gaming segment by establishing an in-house gaming division, expected to be operational by February, following challenges in acquiring a suitable external company. This move aims to further diversify revenue streams and leverage existing expertise.

Strategic Margin Expansion and Global Positioning

Management outlined a strategy to improve consolidated EBITDA margins to 44% and PAT margins to 25% conservatively, with a long-term target of 30-32% within two years. This will be achieved by leveraging the Indian entity's execution capabilities for acquired businesses, focusing on cost efficiencies, and strategically positioning the PMG brand. By using Tippett's name for high-end Western projects and Phantom for more affordable offerings, the company aims to attract a broader client base and enhance profitability across its global operations.

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