Phantom Digital

Phantom Digital Effects Limited executed significant strategic moves in FY25, notably the acquisition of Tippett Studio, which received final court approval on March 26, 2025. Tippett, which generated US$7 million in revenue last year, is projected to contribute US$12-15 million in FY26, with Phantom acquiring an 80% stake. The company also established Spectre Post Private Limited in Bangalore, introducing digital intermediate services and contributing to notable domestic blockbusters. Furthermore, the wholly-owned subsidiary in China, Hangzhou Huantong Digital Technology Co., Ltd., is expected to generate US$5-8 million in revenue this year, enhancing market penetration in the significant $4 billion APAC market.

For Fiscal Year 2025, Phantom Digital Effects Limited reported a total income of Rs. 104.37 crores, with revenue reaching Rs. 102.16 crores, marking a 14.36% year-on-year increase. EBITDA grew by 2% year-on-year to Rs. 39.69 crores, maintaining a healthy margin of 38%. However, the company experienced a decline in profitability, with net profit falling 16.2% year-on-year to Rs. 20.20 crores, resulting in a net profit margin of 19.36%. Earnings per share (EPS) also saw a significant decrease of 44.7% year-on-year, settling at Rs. 14.88.

The company faced challenges with outstanding receivables, reporting Rs. 60.09 crores at H1 FY25, of which Rs. 38.77 crores (58%) were collected by May 2025. For H2 FY25, Rs. 26 crores were outstanding, with Rs. 22 crores collected. As of today, total outstanding receivables from FY24-FY25 stand at Rs. 36 crores, with Rs. 28 crores being more than 6 months old. Management aims to collect these within Q2-Q3 FY26 and improve cash flow, which an analyst noted was negative Rs. 20 crores from operations, emphasizing the need for better working capital management.

Phantom Digital Effects Limited enters FY26 with a strong confirmed order book of Rs. 72 crores, split between Rs. 38 crores domestically and Rs. 34 crores internationally, all expected to be realized within FY26. Beyond this, the company has a healthy pipeline of potential projects valued between Rs. 270-312 crores, with 60% originating from international opportunities. Management anticipates a 30% growth in standalone operations over FY25 and, with Tippett's consolidation, projects a significant 100% increase in overall revenue, potentially reaching Rs. 200 crores for FY26, demonstrating confidence in future growth.

The company plans capital expenditures of Rs. 10-15 crores for investments in foreign countries, primarily for assets to support global expansion. Gross debt stands at approximately Rs. 15 crores, identified as long-term loans for additional working capital, which management plans to reduce over the next 2-3 years. A Qualified Institutional Placement (QIP) for Rs. 140 crores was approved, but the first tranche faced a technical issue where an investor exceeded the 50% funding limit. Management clarified this was not a rejection and the funds are in escrow, with the investor expected to participate in future tranches, as funds are raised on a tranche basis for strategic investments rather than immediate working capital needs.

The company successfully navigated significant industry challenges^🌐 in FY25, including temporary disruptions from actor and writer strikes and resulting production halts. Despite these headwinds, Phantom Digital Effects demonstrated resilience through its diversified business platform, with strong footholds in both domestic and international markets. Management emphasized that the industry is now recovering, with increased project bids and a positive outlook for FY26, especially with global expansions and strategic partnerships, positioning the company for sustained growth.