Digikore Studios Limited IPO

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i. Digikore serves as a hub for top-tier industry talent. Having production facility in India, they specialize in delivering Visual Effects (VFX) for a diverse range of projects such as Films, Web Series, TV Series, Documentaries, and Commercials, all while maintaining a strong emphasis on cost-effectiveness. Their reputation as a world-class VFX studio is a result of their harmonious blend of imaginative creativity and cutting-edge technology.

ii. Digikore was established by Mr. Abhishek Rameshkumar More in the year 2000. In its initial years, Digikore made its mark in the realm of Animation and Visual Effects (VFX). Worked with extensive portfolio of many Films and TV Series, notable works include projects like “Thor: Love and Thunder,” “Black Panther: Wakanda Forever,” “Glass Onion: A Knives Out Mystery,” “Deadpool,” “Star Trek,” “Jumanji,” “Stranger Things,” “The Last Ship,” “Titanic” “Gosht Rider: Spirit of Vengeance” “Transformer: Age of Extinction” “Crouching Tiger, Hidden Dragon: Sword of Destiny” and many more prestigious productions.

iii. As a TPN-audited VFX studio, Digikore offer a comprehensive suite of visual effects services, overseen by their experienced production team. Their artists harness the power of the latest software, hardware, and proprietary tools to produce exceptional VFX for some of the most prominent Films, Web Series, and TV Series.

iv. Notably, the company stand among the select few studios in India that have undergone audits from esteemed entities such as TPN. Also approved for projects from production houses like Disney/Marvel, Netflix, Amazon, Apple, Paramount, Warner Bros., and Lions gate. Their commitment to excellence is further underscored by the dedication to fostering an internal culture rooted in diversity, equality, and inclusion – vital components that fuel our innovation and creativity.

v. The company has embarked on a new venture, known as Digikore Matchmaking, extending its portfolio to encompass new dimensions of business endeavor.

vi. They specialize in creating visual experiences that captive audience around the world. The company also has a decade’s worth of experience in pushing the boundaries of creativity and technology to deliver its exceptional VFX solution for Movies, TV, Net series and Commercials. With a team of skilled artists, a dedication to investing in the latest technology, and a proven track record of serving clients from diverse sectors and countries, “Digikore” has earned a good reputation among its clients in the VFX industry.

vii. They conduct their operations with focus on to provide reliable, cost-effective and high-quality VFX shots at competitive price for the US and European markets. The company has the flexibility to work on any kind of project, either small or large, with faster turnaround and scalability to generate long-term value for the Company. The Company has a team of creative-driven professionals, who are capable of managing all sorts of VFX production tasks every single step of the way to deliver high-quality, industry standard content for the client.

Objects of the Digikore Studios Limited IPO:

Our Company proposes to utilize the Fresh Proceeds towards funding of the following objects 1) Funding Working Capital requirements 2) General Corporate Purposes 3) Offer Expenses
DRHP of Digikore Studios Limited IPO
RHP of Digikore Studios Limited IPO

Digikore Studios Limited IPO Details:

Open Date: Sep 25 2023
Close Date: Sep 27 2023
Total Shares: 1,782,400
Issue Type: Book Built Issue IPO
Issue Size: 30.48 Cr.
Lot Size: 800 Shares
Issue Price: ₹ 168 - 171 Per Equity Share
Listing At: NSE Emerge
Listing Date: Oct 04 2023

Promoters And Management:

i. Mr. Abhishek Rameshkumar More, aged 46 years, is the Promoter and Managing Director of the Company. He has done Post Graduate diploma in business Entrepreneurship and management with specialisation in new enterprise creation. He is a visionary entrepreneur and the Founder of the Company, with more than twenty years of experience in content production and post-production for film and television, he has established himself as a proven leader in business strategy, strategic planning, marketing, and operations. As an entrepreneurial, pioneering, and techno-creative leader, he possesses disruptive ideas and a passion for achieving results. His exceptional problem-solving skills and out-of-the-box thinking make him adept at solving large-scale challenges. With a strong background in technology and creativity, coupled with excellent management skills, he actively contributes as an entrepreneur and investor, driving innovation and success at all levels. ii. Mr. Rohit Ramesh kumar More, aged 50 years, is the Director of the Company. He has done bachelor's Degree in Engineering from Bharati Vidyapeeth College of Engineering, Pune. With a strong foundation in new business development, adept team-building abilities, and a sharp acumen for business strategy, he possesses a skill set that propels organizations towards success. His expertise lies in identifying untapped market opportunities, forging strategic partnerships, and cultivating long-lasting client relationships. Armed with a keen eye for talent, he fosters cohesive and high-performing teams, empowering individuals to achieve their full potential. iii. Mr. Rameshkumar More aged 73 years have experience more than 50 years of experience in managing and growing businesses.A serial entrepreneur, he has played a very important role in the growth of the aerated beverage industry in India. His expertise lies in financial planning, forecasting and analysis.

Financials of Digikore Studios Limited IPO:

Particulars (in Cr) Q1Fy24 Fy23 Fy22 Fy21
Revenue 11.83 34.44 24.88 4.87
Other income 0 1.12 0 1.28
Total Revenue 11.83 35.56 24.88 6.16
Cost of Technical Subcontractors 1.13 7.35 12.36 2.31
Employee benefits expense 3.75 11.65 5.39 1.63
Finance costs 0.38 0.71 0.4 0.73
D&A 0.19 1.04 0.92 0.26
Other expenses 2.54 9.07 4.77 1.21
Total Expenses 7.99 29.83 23.84 6.13
Profit before tax 3.84 5.73 1.04 0.03
Total tax expense 1.04 1.35 0.58 0.01
Profit for the year 2.8 4.37 0.47 0.02

Comparison With Peers:

Parameters (cr) Phantom Basillic Fly Digikore Studios
Sales 58 79 35
PAT 16 28 4.37
OPM 39% 49% 21%
3Y Sales Growth 64% 102% 140%
3Y PAT Growth 427% 781% 1458%
D/E 0.23 0.13 1.04
Free Cash Flow 3Y -18 1.18 1.75
Mcap 550 787 108
Mcap/Sales 9.48 10 3.09
P/E 33 28 25
 

Recommendation on Digikore Studios Limited IPO:

Review and Recommendation of Digikore Studios SME IPO by IZ team is 5/10

A) Company Overview:

1. Industry Experience: 23 years in the VFX industry. 2. Clientele: Prestigious clients including Disney/Marvel, Netflix, Amazon, Apple, Paramount, Warner Bros., and Lionsgate. 3. Revenue Sources: 100% international, mainly North America (85%) and Europe (11.25%). 4. Employee Strength: 357 employees, of which 265 are in VFX. 5. Notable Projects: Films like "Thor: Love and Thunder," "Black Panther: Wakanda Forever," "Deadpool," and TV series like "Stranger Things."

B) Financial Performance:

1. Revenue: Grown from 6 cr in FY21 to 35 cr in FY23. 2. Profit After Tax (PAT): Increased from 1 lakh to 4.8 cr during the same period.

C) Peer Comparison:

1. Sales (in cr) a) Phantom: 58 b) Basillic Fly: 79 c) Digikore Studios: 35 2. Profit After Tax (PAT) (in cr) a) Phantom: 16 b) Basillic Fly: 28 c) Digikore Studios: 4.37 3. Market Cap (Mcap) a) Phantom: 550 cr b) Basillic Fly: 787 cr c) Digikore Studios: 108 cr 4. P/E Ratio a) Phantom: 33 b) Basillic Fly: 28 c) Digikore Studios: 25

D) Analysis:

1. Strengths: a) Strong Industry Experience: With 23 years of experience, Digikore has a robust portfolio. b) Global Client Base: The company has a 100% international revenue stream, showing global acceptability. c) Impressive 3-Year PAT Growth: 1458% is notable and suggests effective cost management. 2. Weaknesses a) High Debt-to-Equity Ratio: At 1.04, it is higher compared to peers, indicating higher financial risk. b) Low Operating Profit Margin: At 21%, it is lower than peers. 3. Opportunities: a) Undervalued: Compared to peers, Digikore has a lower P/E and Mcap/Sales ratio, offering room for upside. b) Growing Industry: The sector has shown robust growth, and Digikore is well-positioned to capitalize on it.

Conclusion:

Digikore Studios has shown impressive growth and has a strong industry presence. However, the higher debt and lower OPM are areas of concern. Given its current valuation compared to peers, it seems relatively undervalued. The listed players like Phantom and Basillic Fly could pose a competitive threat. Investors should weigh the strong growth prospects against the financial risks and market valuation before making an investment decision.

Lead Manager of Digikore Studios Limited IPO:

  1. Sarthi Capital Advisors Private Limited

Registrar of Digikore Studios Limited IPO:

  1. Bigshare Services Private Limited

Company Address:

Digikore Studios Limited C/o Poona Bottling Company Private Limited., 410/1, 411/2, Mumbai Pune Road, Dapodi, Pune - 411012 Phone: 020-35553555 Email: cs@digikore.com Website: https://digikorevfx.com/

Discussion on Digikore Studios Limited IPO:

1 Comment

    Another VFX company to come up with an IPO. let us see how it performs on listing day. Bascilic Fly Studios gave wonderful return to investors.

    Reply

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