Basilic Fly Studio Ltd Q1 FY27 Earnings Call Summary

Revenue

Margin

Demand

Guidance

Tone

Event Participants

Executives

4 Balakrishnan, Gaurav Mehra, Yoga Lakshmi, Zameer Hussain

Analysts

10 Abbas Valla, Anuj Sonpal, Bhavya, Deepak Parak, Disha, Dishon Jain, Manish Gupta, Rahul Munay, Ravi Purohit, Sheetal Parikh

Financials & KPIs

Metric	Reported	Commentary
Consolidated operational revenue	₹408 crores	+34.1% YoY vs ₹304 crores; Q4 FY26 impacted by project rescheduling to FY27; 73% 3-year revenue CAGR
India standalone revenue	₹120 crores	+64% YoY vs ₹73.5 crores; post-Hollywood strike revival driving offshoring demand
Consolidated EBITDA	₹85 crores	+19.2% YoY; 20.9% margin; compression from 14 senior leadership hires and Q4 project timing
Standalone EBITDA	₹51.9 crores	43.1% margin, up 60 bps from 42.5%; high-volume offshore execution engine profitability
Standalone PAT	₹31.6 crores	+84.8% YoY; 24.2% margin, +155 bps expansion
Order book	₹232 crores	End of FY26; includes sizable Q1 FY27 wins not yet disclosed
Bid pipeline	₹456 crores	All-time high; ~50% in advanced conversion stage; bid ticket size now 1.5-2x historical average
Consolidated net worth	₹344 crores	As of March 31, 2026
Debt-to-equity	0.03x	Nearly debt-free balance sheet
DSO	96 days	Consolidated; aged receivable recovery underway - monthly collections Mar-May ~2x average
Cash from operations	₹22.9 crores	Improved from ₹20 crores prior year
Employee cost ratio	68% of revenue	Consolidated post-Olympus (vs 30% pre-acquisition India-only); overseas cost 74-75% of overseas revenue = key leverage point
Employees	~780	450 India (250-300 Chennai, 150 Pune, 35 Bengaluru), 200+ London, 130 Paris, 5-10 US/Canada

Geographic & Segment Commentary

Europe: Largest market at 60% of revenue. U.K. subsidiary (Olympus, 70% acquired July 2024) houses 200+ with two decades of BAFTA/Emmy legacy; Paris has 130 staff including CCO and a 125-member Bollywood-servicing team. France momentum strong: government raised incentive percentage and expanded qualifying expenditure (40% VFX tax credit; 10-15% non-remittable spend deployable to India).
India: Standalone revenue ₹120 crores, +64% YoY with 43.1% EBITDA margin. 450 artists across Chennai/Pune/Bengaluru executing full-service compositing and CG work; mix of subcontract work and growing direct premium engagements. Academic partnerships with SRM and Loyola College Chennai for talent pipeline.
North America: 21% of revenue; small footprint (5-10 in LA/NY/Vancouver) focused on production-side supervision and business development. Targeted M&A progressing rapidly to enter new geographies, strengthen North American footprint, and diversify into immersive experiences, commercials, and gaming.
Bengaluru: 35 high-end CG artists (up from 0 in October 2025), targeting 100 FTEs by end-FY27; works remotely connecting directly to London/Paris missions; key margin lever for offshoring.

Company-Specific & Strategic Commentary

Global M&A Strategy: Recent QIP-funded inorganic expansion; Olympus acquisition (July 2024) delivered direct client access plus industrial-scale offshore production. Next targeted North American M&A at advanced stage - CFO states it is a key FY27 event determining long-term strategy directed toward immersive experiences, commercials, and gaming.
AI Integration: Two-track approach - predictive non-generative AI (Shortgrid pipeline with ML-driven idle capacity detection, real-time task reallocation, scenario forecasting; gamified AI performance monitoring) and production-grade generative AI (ComfyUI workflows, internally trained model libraries, distributed GPU framework) delivering 3-5x faster iteration across concept art, previs, shot vis. De-aging work on Thug Life (Kamal Hassan) well-received; hybrid cloud/on-prem shift reduces computation costs ~40%.
Front-End Leadership Build: 14 senior creative and business development veterans onboarded from Netflix, Disney, ILM, DNEG, MPC across US/UK; converting to sales leads and enabling 1.5-2x higher average bid ticket sizes; initial costs absorbed in FY26 margins.
Creative Prestige: Three collaborative projects in top 20 Academy Award nominations (Mission Impossible, Electric State, Shutterburd short - official Oscar nomination); 430+ projects delivered globally.
Pricing Model: Per-day cost basis (8-hour/day) per discipline across London, Paris, and India; India charges 4-5x less than London. India business largely T&M/subcontract; overseas mix of T&M (smaller projects) and fixed milestones (larger series).

Guidance & Outlook

Metric	Guidance / Outlook	Commentary
FY27 revenue growth	In line or slightly better than FY26 (34.1% YoY)	Backed by ₹232 cr order book, ₹456 cr bid pipeline, marquee projects slated (Harry Potter), France demand surge; Q1 wins achieved though not disclosed
EBITDA margin	+2-2.5% improvement expected in FY27	Offshoring mix shift (Bengaluru scaling), industry revival, more on-site work, AI operational efficiency; leadership hires now converting to sales
Bengaluru headcount	100 FTEs by end-FY27	Currently ~35; tripling expected
Aged receivable recovery	Full recovery by Sept-Dec 2026	Mar-May monthly collections ~2x average; no write-off plans stated
North American M&A	Early closure in FY27	Advanced stage; targets immersive, commercials, gaming diversification

Risks & Constraints

Risk	Context
Revenue timing volatility	Revenue recognition tied to shoot schedules, actor availability, and permissions; Q4 FY26 projects shifted to FY27 causing quarterly de-growth. Management emphasizes no contract losses, but quarterly variability is inherent to the industry.
Client concentration	>50% of revenue under Netflix as contractual umbrella, followed by Amazon; appears as concentration though work spans multiple producers. Exposure to streaming platform budget decisions.
AI security & compliance	Client approvals required for AI usage; strict trail logging, TPN/Apple/Disney certifications, Red Team and dark web monitoring; AI models deliberately kept off-cloud for security - operational overhead and new process requirements.
Capital intensity of AI	AI requires inevitable capex investment; management notes companies without investment appetite face higher operating costs and survival risk - competitive differentiation pressure.
Aged receivables	Hollywood strike legacy debtors taking longer than expected industry-wide; DSO 96 days consolidated (124 days flagged by analyst); recovery expected Sep-Dec 2026, partial industry-wide timing.

Q&A Highlights

Employee Footprint & Cost Structure (Sheetal Parikh)

Question: Location-wise headcount and specialization across Chennai, Pune, London, Paris, Vancouver?
Answer: (Balakrishnan) Chennai 250-300, Pune 150, Bengaluru 35, London 200+, Paris 130, US/Canada 5-10. India handles full-service compositing/CG; London holds VFX supervisors/producers serving Netflix, Amazon, Warner Brothers, HBO; Paris houses CCO and 125-member Bollywood project team; LA/NY has production-side supervisors and business development.
Question: Employee cost rose to 68% of revenue FY26 from 30% pre-Olympus - sustainable range?
Answer: (Gaurav Mehra) Not apples-to-apples - 30% was pre-acquisition India-only; overseas cost is 74-75% of overseas revenue, the key leverage point; offshoring more high-end work to India (Bengaluru expansion) will drive improvement.

FY26 Revenue Timing, Order Book & Margins (Disha)

Question: What caused FY26 revenue de-growth?
Answer: (Gaurav Mehra, Balakrishnan) Q4 FY26 projects rescheduled to FY27 due to shoot timing, actor availability, permissions; common in the industry, shifts of 3-4 months frequent; no contracts lost - purely timing.
Question: Order book numbers?
Answer: (Balakrishnan) ₹232 crores order book; ₹456 crores bid pipeline, ~half at advanced conversion stage.
Question: FY27 margin guidance?
Answer: (Gaurav Mehra) Expect 2-2.5% margin improvement driven by: offshoring contribution increase, industry/offshoring demand revival, more on-site work, and AI-driven operational efficiency.

Receivables & DSO (Manish Gupta)

Question: Receivable days hit 124 in FY26 - progress on recovery and any write-off plans?
Answer: (Gaurav Mehra) Good collection against aged receivables; Mar-May monthly average collection ~2x normal; full recovery expected by Sept-Dec 2026; no write-off plans mentioned.

AI Impact on Pricing Environment (Sheetal Parikh)

Question: With AI lowering VFX production cost, any pricing pressure or fee compression in recent bids?
Answer: (Balakrishnan, Gaurav Mehra) AI opens new opportunities - production shifts from physical shoots to digital, increasing VFX scope; pricing pressure largely offset by volume growth and lower operational costs; AI expands demand to producers who previously couldn't afford VFX.

Pricing Model & T&M vs Fixed (Sheetal Parikh)

Question: What portion is fixed price vs T&M; pricing differences Hollywood vs domestic OTT?
Answer: (Balakrishnan, Gaurav Mehra) Pricing based on per-day cost (8-hour day) per discipline; India is 4-5x cheaper than London. India business largely T&M from subcontracting; overseas mixture - smaller projects T&M, larger series fixed milestone-based covering pre-conceptualization, environment/creature creation.

India VFX Right-to-Win vs Historical Failures (Ravi Purohit)

Question: Past Indian studios (Crest Animation, Tata Elxsi) failed to sustain - what's different now?
Answer: (Balakrishnan, Gaurav Mehra) Talent readiness has transformed - ILM moved to Mumbai post-Covid, Netflix opened in Hyderabad, Rodeo Effects started Bengaluru; global studios now see India as inevitable for cost matching; government subsidies (30-50% including France 40%); changing viewer expectations (Kalki) expanding VFX demand; Olympus model combines premium front-end with offshore execution.

AI Competition & Entry Barriers (Dishon Jain)

Question: Will AI make it easier for peers to enter and for customers to in-house VFX?
Answer: (Balakrishnan) 20-year legacy of workflows, asset libraries, and tool sets creates durable advantage; new entrants lack the asset base AI models need; AI adoption compliance/trails add friction; AI also creates new work (low-budget CG animals) expanding total addressable market.

Client Concentration (Bhavya)

Question: Top 5 clients contribute 60% of revenue - why so skewed?
Answer: (Gaurav Mehra) >400 is projects, not clients; Netflix umbrella contributes >50% - multiple producers work under Netflix contract, so concentration is contractual platform exposure rather than single-producer dependency.

FY27 Outlook & M&A Update (Anuj Sonpal)

Question: FY27 outlook; any material change in last 3-4 months; update on $5-7 million order and M&A?
Answer: (Balakrishnan, Gaurav Mehra) Growth in line or better than FY26; France momentum with expanded incentives (increased qualifying expenditure); marquee projects slated for FY27 (Harry Potter); Q1 saw sizable wins added to order book; M&A update to be disclosed at Q1 results; France U.K. 10-15% non-remittable spend allows 50-60% of work to be done in India.

Key Takeaway

Basilic Fly Studio delivered consolidated revenue of ₹408 crores in FY26 (+34.1% YoY) with India standalone revenue surging 64% to ₹120 crores on Hollywood strike recovery, while consolidated EBITDA of ₹85 crores (20.9% margin) absorbed planned investment in 14 senior creative/BD hires. Standalone EBITDA margin expanded to 43.1% and PAT grew 84.8% to ₹31.6 crores. The company closed FY26 with a ₹232 crores order book and all-time-high ₹456 crores bid pipeline, alongside three Academy Award top-20 nominations. Growth strategy centers on direct client proximity via U.K./France subsidiaries, offshoring scale through Chennai/Pune/Bengaluru (targeting 100 in Bengaluru by end-FY27), AI-driven efficiency (3-5x faster iteration; 40% computation cost savings), and an advanced-stage North American M&A targeting immersive/commercials/gaming. Management guides FY27 revenue growth in line or better than FY26 with 2-2.5% margin improvement, supported by marquee projects (Harry Potter) and expanded French tax incentives. Watch-points include quarterly revenue timing volatility from film schedules, aged receivable recovery through Sep-Dec 2026, and >50% Netflix client concentration.