Basilic Fly Q1 FY27: Revenue grew, but margins fell as integration and cost actions continued

Basilic Fly Studio Limited entered FY27 with steady top line growth but weaker consolidated profitability. In Q1 FY27, consolidated revenue from operations rose to INR 103.5 crore, up 9.9% year-on-year. Operational EBITDA declined to INR 14.4 crore and the EBITDA margin fell to 13.91%. Profit after tax dropped to INR 6.7 crore, translating to a PAT margin of 6.30%.

The company’s India business remained far more profitable on a standalone basis. Standalone revenue from operations was INR 26.0 crore, up 28.1% year-on-year. Operational EBITDA increased to INR 11.0 crore and margins stayed above 42%. Standalone PAT was INR 5.5 crore.

Management attributed the consolidated margin decline to a mix of factors that were described as non-structural and transitional. These included unrealized foreign exchange losses, higher IT costs, higher management travel, overlapping work and exceptional severance costs. The leadership team also reiterated that the first half is seasonally weaker and that execution and revenue are typically heavier in the second half.

Demand indicators: bid pipeline and undelivered order book

The operational narrative for the quarter focused on visibility into future workloads. In the investor deck, the company cited an active bid pipeline of GBP 55 million, with around 40% at an advanced stage. On the call, management also stated an active bid pipeline of around INR 700 crore. While those two figures use different currencies and appear in different parts of the disclosures, both were presented to convey elevated bidding activity.

More concretely, management disclosed an undelivered order book of around INR 250 to 260 crore as of end-July 2026, to be delivered within FY27. The CFO indicated that the execution of this order book should start toward the end of Q2 and extend through Q4, and that revenue recognition depends on milestone completion and client approvals rather than a straight-line schedule.

Management also said it had won new international orders worth INR 105 crore in FY27 year-to-date, describing it as 25% of FY26 reported revenue. Separately, the company highlighted progress in the domestic OTT market, stating it onboarded Netflix and Amazon for full-length domestic OTT mandates and that domestic OTT sales revenue had already crossed about two times the full-year FY26 revenue from that segment.

Operating model: shifting delivery to India and scaling Bengaluru

A central element of Basilic Fly’s strategy is its hybrid delivery model: client-facing creative supervision and leadership through teams in the UK, Europe and North America, combined with scalable production and technical execution in India.

In Q1 FY27, management reiterated a 30 to 40% structural cost advantage driven by India-led delivery. The company is continuing to move selected roles and functions from the UK and Europe to India. It also plans to expand Bengaluru as a higher-end support base for the UK subsidiary, with billing having commenced earlier and a physical facility expected to be operational from October.

During the Q&A, management framed severance costs and restructuring as a deliberate timing decision, choosing a lighter quarter to undertake workforce transitions ahead of a heavier delivery period in the second half. The CFO stated that the severance cost recognised as exceptional item in Q1 FY27 was about INR 2.9 crore.

Technology and security: building infrastructure for scale

The company’s technology agenda is being positioned as the second lever for long-term operating leverage. In Q1 FY27, Basilic Fly reported that its enterprise-grade NetApp storage infrastructure has gone live. Management said this transition reduces cloud dependence while improving scalability and control, which is relevant for high-resolution VFX production.

Two workflow initiatives were also highlighted. Project Hybrid and the USD pipeline integration have moved into pre-rollout testing. Management provided near-term timelines, indicating Project Hybrid is on track to be rolled out at the end of August 2026 and the USD pipeline integration by September 2026. The stated goal is to unify production workflows across global studios and enable interoperability.

The company also described ongoing AI initiatives. The deck referenced AI-assisted production workflows and an AI lab developing tools for automation, facial enhancement, workflow orchestration and production optimisation. On the call, management stated it had integrated ComfyUI into its pipeline for proprietary tool sets including de-aging and texture creation.

On security, Basilic Fly said it became the sixth VFX studio globally to be awarded the TPN Stella Award. Management also noted that a Red Team assessment is expected to be completed in September and a Paramount security assessment is progressing with completion expected in early October.

Capital allocation and M&A: cash in hand and an active search

Investors sought clarity on the use of proceeds from prior fundraises. The CFO stated that about INR 37 crore of QIP proceeds and about INR 21 crore of IPO proceeds remained unutilized, and that a large part is kept in fixed deposits.

Management said it has evaluated multiple M&A opportunities and is at an advanced stage of discussions, with the intent of adding capabilities and potentially opening new geographies where current presence is weaker. In response to a question on funding, the CFO indicated the company has the appetite to fund the acquisition largely from funds in hand and does not plan to borrow at this point.

Takeaways from Q1 FY27

Q1 FY27 showed Basilic Fly’s core growth engine still running, but also highlighted the complexity of running a multi-geography VFX platform where forex swings, IT investments and restructuring can meaningfully affect reported margins. Management’s focus is now on converting a large bid pipeline into executable work, delivering the undelivered order book through Q2 to Q4, and improving consolidated profitability through offshoring, Bengaluru scale-up and technology-driven productivity.