Made in India VFX firm Digikore Studios set for IPO; plans to build a global base

Indian visual effects company Digikore has worked on projects including Titanic 3D. It is set to launch its IPO in September. Image: Digikore website

Popular international content titles, including Thor: Love and Thunder, Black Panther: Wakanda Forever, Star Trek, Jumanji, and Stranger Things, have one thing in common. It is the Indian visual effects (VFX) company Digikore Studios that has worked on over 200 global projects across films and web series and now plans to build a global base.

In its next phase of growth, the company is set to launch its initial public offering (IPO) after receiving approval from NSE EMERGE. The IPO is scheduled to open on September 25, 2023, and close on September 27. The size of the IPO is Rs 30.479 crore and the price band is between Rs 168-171.

"The last six years have been good, and now it is time to go for the next step and grow in North America and create a base there. We want to position Digikore as a global company, which will help us get bigger international projects. The mindset is such that, as an Indian VFX and animation company, we have not been able to get bigger projects. We have a subsidiary in Canada called Digikore Visual Effects Inc., and we plan to lead with that company," Founder Abhishek More told Moneycontrol.

He said that the target is to become a $25 million company by 2026. "Last year (FY23), we had revenue of Rs 33 crore and are on target to touch Rs 50 crore this year (FY24). We have a 2026 revenue target of Rs 200 crore. While this seems to be a big number in Indian terms, for a Canadian VFX company, $25 million is considered a mid-level company. There are VFX studios that are in the $70-80 million range, going as high as $200-300 million."

More had started Digikore as a 2D animation company in 2010 to follow his passion and to avoid joining the family business. "I made every wrong decision in the first 10 years. My father told me to shut down the business, but I wanted to continue. When we started, the industry was great, but by 2004–2005, 2D animation was on its way out. It was taken over by 3D animation, due to which we faced a lot of losses. By 2009, the situation was such that I had to shut down the company and get into the family business. But I wasn't ready to give up. We scaled down to five employees by 2009 from 150, just enough to keep the ship afloat."

More said that his journey with Digikore has been a roller coaster ride. "We eventually identified VFX in 2010 again, and it was early days for it then. I came to know that James Cameron is making Titanic 3D. I managed to get his email ID and started mailing him to get some work for his project. I sent him many emails and eventually landed with Titanic 3D as our first project as a VFX studio. That became my calling card, which helped me bag other projects."

The twist in the tale came when More decided to work on Indian projects.

"I got greedy for recognition, and that’s the first mistake I made in the VFX space. I wanted to see my company’s name on the big screen and decided to work on Indian projects. This turned out to be a big mistake. In 2013, we set up operations in Mumbai and got into Bollywood. We did projects like Haider, Talvar, and Bajrangi Bhaijaan. We turned a profit-making company into a loss-making one by 2016 because the revenues coming from the India projects were lower. We took the hard decision of shutting down the Bollywood business overnight in 2016 and started focusing on Hollywood again. Since 2016, I have only been looking at profits," the founder said.

The high point in Digikore's journey was soon followed by a low point when COVID-19 hit the world. "In the first six to nine months of COVID, there was little to no business, and things became bad. The situation started settling down because of high content consumption, which led to increased content production. COVID saw millions of viewers get on to streaming platforms, which made them double their content spend. Even TV (broadcasters) upped their game and started producing more content. Films too have gotten bigger, and that means more VFX. All these factors have driven growth," he said.

In FY21, the VFX studio recorded Rs 6 crore in revenues, which increased to Rs 24 crore in FY22.

The boom in over-the-top (OTT) platforms has been one of the biggest drivers of growth for many VFX studios. In 2022, five global VFX players, including ILM, either started operations or announced their entry into the Indian market. Last year alone, streaming platforms made investments amounting to $60 billion in original content production globally, according to a FICCI-EY 2023 report.

For Digikore, 70 percent of its revenue comes from episodic content, which includes series for OTT and TV. The remaining 30 percent comes from films.

The bulk of the business comes from international markets. "As of today, over 99 percent of revenue comes from outside India, and domestic business is less than 1 percent. Our growth will be in North America and not in India because budgets are very low in India, especially for episodic content," he said.

While the company is growing its operations in North America, the bulk of the heavy lifting will be done from India in terms of talent. "In North America, we would not have more than 25-30 key creative production talent. The majority of the delivery workforce will be from India which will make us price-competitive. We currently have 400 employees and by 2026 we have a roadmap to expand our team to a headcount of 900 in India," More said.