Top 3 VFX stocks to add to your watchlist
- After the IT revolution, India is poised to become the epicentre of another global shift, this time redefining the art of visual storytelling through the power of VFX.
The 1990s tech boom was a time of groundbreaking innovation, from which India emerged not merely as a participant but as a key driver, attracting multinational corporations with its robust information technology outsourcing capabilities.
This era showcased India's growing IT prowess, characterised by innovation, efficiency, and a subsequent economic surge.
A similar scenario is unfolding today, albeit with a different focus. The spotlight has shifted from lines of code to pixels. Major global production houses, burdened by substantial production budgets, are increasingly turning to India.
The reason? A new breed of wizards, aka VFX artists, who craft cinematic magic frame by frame. After the IT revolution, India is poised to become the epicentre of another global shift, this time redefining the art of visual storytelling through the power of VFX.
Here are the top 3 Indian VFX studios leading the global charge.
#1 Basilic Fly Studio
Basilic Fly Studio Limited is a VFX studio headquartered in Chennai, with subsidiaries in Canada and the UK. It has expertise in delivering cost-effective and high-quality VFX solutions for a range of media, including movies, television, web series and commercials.
The company has worked on some prestigious projects such as Spider-Man: No Way Home (2021), Shang-Chi and Avengers: Endgame (2019), Mary Poppins Returns (2018), and more. In all it has worked on more than 900 movies and 2,000 series.
It marked a significant milestone in 2023 with the launch of Lightrunner Studio in the UK, extending its capabilities to deliver top-notch visual effects for feature films, television, and advertising. With a strategic focus on hero environments, animated characters and special effects, the new studio is poised to contribute innovative storytelling solutions to the entertainment industry.
The company also launched its IPO on 1 September 2023 and was listed on 14 September 2023 at a premium of over 175%.
Going forward, it plans to open new studios in Europe, South Korea, and potentially expand its facilities in London and Vancouver. This suggests a focus on an international clientele. The goal seems to be acquiring more projects directly from production houses, potentially reducing its reliance on subcontractors.
#2 Phantom Digital
The company is a creative VFX studio specialising in film, web series and commercials. It has delivered more than thousands of shots for domestic and international feature films, (Hollywood) web series & commercials in the past few years.
Apart from working for film production and commercials, it periodically takes up subcontracts from larger visual effects studios as well.
The company supports production houses by providing end-to-end services. As a TPN-certified studio, it offers a wide range of VFX services.
Its specialisations include completing a shot with final compositing, creating 3D elements, photoreal creatures and other natural phenomena.
On 12 March it acquired an 80% majority stake in the two-time Oscar-winning North American outfit Tippett Studio. The acquisition will give Phantom control over the operations and monetary aspects of the legendary visual effects production company founded by Oscar-winning filmmaker Phil Tippett. It is expected to result in a significant revenue growth of 20-25% during the 2024-25 financial year. The company says Tippett Studio has several upcoming projects with major Hollywood studios.
Going forward, it plans to expand in Europe and North America. With a revenue growth target of about 80% for the current year, the focus is on securing more orders from offshore clients.
#3 Digikore Studios
Digikore Studios was founded in 2000 and swiftly ascended to prominence. It has been involved in more than 200 Hollywood films and TV series.
It is among the few Indian VFX entities endorsed by major industry players, including Disney/Marvel, Netflix, Apple, Paramount, Warner Bros., and Lionsgate. Its notable works include Thor: Love and Thunder; Black Panther: Wakanda Forever; Deadpool; Titanic; Ghost Rider: Spirit of Vengeance; Transformer: Age of Extinction; and Crouching Tiger, Hidden Dragon.
With clients spanning India, Australia, New Zealand, the US, and European markets, Digikore Studios is among the pioneering VFX studios in India, boasting deep connections across the global entertainment industry.
A recent highlight was the appointment of a senior Netflix executive as its creative director and VFX supervisor on 21 March, indicating a strategic move to further enhance its creative prowess.
The rapid surge of over-the-top (OTT) entertainment platforms has galvanised substantial growth in the VFX space. Having garnered the trust of major industry players, Digikore Studios stands poised to emerge as a preeminent global VFX powerhouse.
The company is all set for a giant leap this year when it expands into the North American market with a production facility in Canada.
It has a revenue target of ₹1,000 crore for FY25.
Conclusion
The state of VFX within the broader Indian entertainment industry highlights its pivotal role and integration across diverse platforms. From its origins as a niche element, VFX has evolved into a fundamental component in crafting captivating and visually striking content.
This evolution is not confined to mainstream cinema but extends to web series, advertisements, and regional language films as well.
The pandemic has catalysed digital transformation, accelerating the shift towards online experiences and bolstering the digital media industry in India.
The value of India’s digital media market is projected to cross ₹86,000 crore by 2025. Notably, a substantial portion (70-75%) of revenues emanate from international clients, indicating the global appeal and competitiveness of Indian VFX companies.
With sustained demand on the horizon, these companies are primed for exponential growth as they leverage their expertise to meet the evolving needs of the digital entertainment landscape.
Nevertheless, it is always prudent to conduct thorough research before making any investment decisions. Ensure that the investment aligns with your financial objectives and matches your risk tolerance.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com
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