Phantom Digital Effects Limited: Soaring High with Strategic Acquisitions and AI Innovation in H1 FY26

Phantom Digital Effects Limited, an Indian visual effects (VFX) and post-production studio, has delivered an exceptional performance in the first half of Fiscal Year 2026 (H1 FY26). The company, known for its end-to-end services for films, web series, and commercials, has demonstrated robust growth in both revenue and profitability, marking a significant step-change in its financial and strategic trajectory.

For H1 FY26, PhantomFX reported a consolidated total income of ₹88.29 crore, reflecting a remarkable 140.91% year-on-year growth. This surge was primarily driven by sustained demand across North America, Europe, and the APAC region. The company's profitability also saw a substantial uplift, with consolidated EBITDA increasing by 75.39% year-on-year to ₹28.62 crore. The EBITDA margin stood at 32.42%. Profit After Tax (PAT) grew by an impressive 149.99% year-on-year to ₹20.68 crore, with a PAT margin of 23.43%. Earnings per share (EPS) advanced to ₹13.87, up 127.75% from the previous year. These figures underscore the company's strong operational efficiency and its ability to capitalize on market opportunities.

Strategic Expansion and Global Integration

PhantomFX's H1 FY26 performance is not just about financial numbers; it also marks a pivotal phase in its strategic evolution, particularly through significant acquisitions and global expansion. The company successfully completed the acquisition of 100% equity in Milk Visual Effects Limited (UK), including its boutique brand Lola Post. This acquisition is a strategic move to strengthen PhantomFX's presence in Hollywood and European markets, providing access to a broader clientele including BBC, Netflix UK, and Sky. Milk VFX's legacy of Academy, BAFTA, and Emmy awards significantly enhances PhantomFX's global brand prestige and creative firepower. The total acquisition cost for Milk is $7.5 million, including liabilities, with an additional$2.7 million for working capital, totaling $10 million, payable in tranches. The first tranche has been paid, and subsequent payments for liabilities are expected by December 1st, with the remaining tranches to follow.

Furthermore, the integration of Tippett Studio, acquired in June 2025, is now complete, providing PhantomFX with a Hollywood legacy and direct engagement with premier Western clients. To unify its global operations and enhance market positioning, PhantomFX introduced the 'Phantom Media Group' (PMG) as an umbrella brand. This new entity brings together Milk, Tippett Studio, Lola Post, PhantomFX, and Spectre Post, ensuring seamless collaboration and consistent creative direction across India, the US, the UK, Europe, and China.

Advancing with Technology and AI

PhantomFX is positioning itself as an innovation hub, actively leveraging technology and Artificial Intelligence (AI) to redefine production workflows. The company is dedicated to developing powerful in-house software to support its cutting-edge VFX pipelines. The R&D team continuously explores new ways to integrate AI into both creative and technical processes, with custom AI-powered toolsets designed to accelerate production and improve quality. Early results from these AI tools have shown meaningful reductions in repetitive tasks, proving commercially impactful by enabling more work in shorter timeframes, optimizing resource allocation, and ultimately enhancing profit margins without compromising creativity.

Management highlighted that AI is not a replacement for traditional filmmaking but a powerful tool to improve efficiency. While AI has limitations in high-quality film production, especially for complex emotions, it is proving highly effective for commercials and pre-visualization, widening the market for such services. The company is also exploring new verticals, including a small gaming division, which is expected to be operational by February.

Financial Discipline and Future Outlook

Operationally, PhantomFX maintains disciplined receivables management. As of November 19, 2025, outstanding receivables stood at ₹61.49 crore. The company achieved a 65% collection rate from its unbilled revenue as of September 2025 and a 59% collection rate from November billings. Management is focused on strengthening collection cycles to 90 days, expecting a more predictable and steady cash flow profile in the quarters ahead.

Looking forward, PhantomFX has a robust order book of ₹201.32 crore as of October 31, 2025, with approximately 80% from international projects. The bidding pipeline stands at a substantial ₹817 crore, providing strong revenue visibility. The company projects a consolidated revenue of ₹240 crore for FY26, including the contribution from Milk VFX, and anticipates ₹300-350 crore for FY27. Consolidated EBITDA margins are expected to be around 44% and PAT margins 25% conservatively, with a target to reach 30-32% EBITDA margin within two years. The company is also in the process of migrating from the SME board to the main board by December 2025 or early January 2026, which is expected to enhance its visibility and access to a broader investor base.

Phantom Digital Effects Limited's H1 FY26 performance, coupled with its strategic acquisitions, technological advancements, and disciplined financial management, positions it for sustained growth and leadership in the global visual effects industry. The company's commitment to innovation and global expansion reflects its ambition to be at the forefront of creative technology.