Top 4 VFX Stocks Transforming the Investment Landscape

Films like “Harry Potter,” “Baahubali,” “RRR,” and “The Lord of the Rings” have set new standards in storytelling, thanks to their groundbreaking visual effects (VFX). These digital effects not only enhance the cinematic experience but also play a crucial role in the success of these films. Over the years, VFX has evolved significantly and has become an integral part of modern filmmaking.

India’s VFX industry has seen a surge in demand, both domestically and internationally. For instance, the dragons in the fifth season of “Game of Thrones” were crafted in Mumbai. This increased demand is fueled by both local and international projects seeking the expertise of Indian VFX studios.

Government Incentives Boosting the VFX Sector

In a move to strengthen the country’s VFX industry, the Indian government has introduced a direct cash rebate initiative for international projects utilizing Indian services. This strategic move aims to propel India’s VFX and animation sector into new heights of growth and global acclaim.

International productions leveraging pure animation post-production and VFX services in India can receive up to 30% of qualifying expenses, with an additional 5% bonus for significant Indian content, capped at Rs 300 million. This incentive positions Indian studios to attract more global projects, reinforcing India’s status as a key player in the global VFX market.

With this context, let’s delve into some of the top VFX companies in India that are making significant strides in the industry.

1. Phantom Digital Effects (PDEL)

Founded in 2016, Phantom Digital Effects offers comprehensive VFX services for films, web series, and commercials. As a trusted partner network (TPN) certified studio, PDEL delivers end-to-end services, including final compositing, 3D element creation, and animation.

PDEL has contributed to major Hollywood and Bollywood films such as “RRR,” “Joker,” “Avengers,” “Transformers,” and “Baahubali.” The company has also secured significant deals with Amazon and Walt Disney, among others. A notable achievement includes a deal with a major OTT platform worth Rs 1,200 million over four years.

Recent Orders and Acquisitions

• April 2024: New VFX service orders worth Rs 170 million.

• June 2023: Resource planning agreement with Netflix Inc.

• September 2023: Secured a Rs 62.5 million order, with Rs 40 million dedicated to international movie production.

• March 2024: Signed a term sheet to acquire an 80% stake in Tippett Studio, USA & Canada, expected to boost revenue by 20-25% in 2024-25.

Financially, PDEL saw a 53.4% increase in net sales to Rs 580 million in March 2024, with net profits rising by 50% to Rs 240 million.

2. Basilic Fly Studio

Established in 2016, Basilic Fly Studio specializes in high-end visual effects and 2D and 3D conversion. Headquartered in Chennai, with subsidiaries in Canada and the UK, BFS has completed over 10,000 projects, including movies, series, and commercials.

BFS has expanded globally with offices in London and Vancouver and plans to open new facilities in Hyderabad and Salem. The company aims for further international expansion in Eastern Europe and South Korea.

Upcoming Projects

BFS is expanding its project portfolio with ventures from Italy, Spain, France, and North America, covering genres like science fiction, action-comedy, docudrama, and high-fantasy series.

Financially, BFS reported a 42.8% increase in sales in March 2024, with net profits up 27.7% to Rs 360 million.

3. Prime Focus (PFL)

Founded by Namit Naresh Malhotra in 1997, Prime Focus has grown into a global media and entertainment services powerhouse, present in 18 cities across five continents. PFL offers post-production activities, including digital intermediate, VFX, and 2D to 3D conversion.

PFL serves major clients like Warner Bros., Disney, Netflix, and Amazon. It was the first company in India to offer high-end post-production finishing systems and the first in the world to convert an entire Hollywood film from 2D to 3D.

4. Digikore Studios

Founded in 2000, Digikore Studios provides a full suite of VFX services for films, web series, TV series, documentaries, and commercials. Based in Pune, Digikore has worked on projects like “Thor: Love and Thunder,” “Black Panther: Wakanda Forever,” and “Glass Onion: A Knives Out Mystery.”

Innovation in Virtual Production

In March 2024, Digikore announced the launch of the world’s first cloud-based marketplace for virtual production sets. This platform democratizes filmmaking by allowing creators with varying budgets to produce high-quality content affordably.

In Conclusion, India’s VFX and animation industry is witnessing tremendous growth, driven by increasing demand for high-quality visuals in films and TV shows, supported by government incentives and educational collaborations. Technological advancements enable studios to undertake ambitious and innovative projects, projecting the industry to achieve a CAGR of 20-25%, reaching a market value of Rs 190 billion by 2025. The future looks bright for the Indian VFX sector, promising more groundbreaking work in the coming years.

Disclaimer: This article is for informational purposes only and should not be considered as investment advice.