Basilic Fly Studio Limited (NSE: BASILIC), a leading global visual effects (VFX) studio, reported a “tale of two narratives” in its third-quarter results for fiscal year 2026. While the company achieved its highest-ever quarterly revenue of ₹105.02 crore, its bottom line and margins were squeezed by significant one-time investments in talent and infrastructure.
The results, announced on February 13, 2026, highlights the company’s aggressive “Vision 2026” strategy, which prioritizes market share and technical capability over short-term margin stability.
Financial Highlights: Explosive Top-Line, Compressed Margins
Basilic Fly Studio (BFS) demonstrated massive scale-up capabilities, with revenue nearly doubling year-over-year. However, the costs associated with this growth led to a sequential decline in profitability.
| Key Metric (Consolidated) | Q3 FY26 Result | Q3 FY25 (YoY) | Change (YoY) | Q2 FY26 (QoQ) |
| Revenue from Operations | ₹105.02 Cr | ₹56.31 Cr | +86.5% | ₹95.19 Cr |
| EBITDA | ₹17.61 Cr | ₹11.16 Cr | +57.8% | ₹22.58 Cr |
| EBITDA Margin | 16.76% | 19.82% | (306 bps) | 23.72% |
| Consolidated Net Profit | ₹10.40 Cr | ₹5.89 Cr | +76.6% | ₹14.63 Cr |
| Standalone Net Profit | ₹8.83 Cr | — | — | ₹14.43 Cr |
Revenue Growth: The 86.5% YoY revenue surge was driven by a strong revival in the global entertainment industry, increased offshoring to India, and the full consolidation of its UK-based subsidiary, One of Us.
Margin Erosion: Operating margins fell to 16.76% from 23.7% in the previous quarter. The company attributed this to “one-off severance costs,” annual appraisals, and a massive hiring ramp-up to support the new Bengaluru division.
Conference Call & Business Highlights: Building the “India Backbone”
During the earnings call held on February 17, 2026, management addressed the “growth vs. profit” trade-off and outlined several key operational milestones:
New Creative Hub: The company officially opened its New Creative Hub in Bangalore, designed to support the UK subsidiary One of Us. This hub is part of a strategy to move high-end creative work to lower-cost regions without sacrificing quality.
Client Diversification: BFS expanded its global footprint to 56 active clients, including 12 new wins in Q3 alone. The company successfully delivered 430 projects during the quarter for major platforms like Netflix, Disney, and Apple.
Project Hybrid: Management introduced “Project Hybrid,” an infrastructure optimization initiative targeting a 50% reduction in operational costs by July 2026. This involves transitioning to AI-enabled production systems and real-time rendering.
Certifications: The studio reinforced its “Tier-1” status by securing successful TPN (Trusted Partner Network), Apple, and Disney certifications, which are mandatory for handling high-budget, confidential Hollywood tentpoles.
Balakrishnan Rajarathinam, MD & CEO said, “The onboarding of experienced global leaders and deployment of AI-enabled systems are enhancing our scalability. While costs increased this quarter due to strategic hiring, we are building a future-ready VFX network.”
Investor Outlook: A Pivot Toward Efficiency
Despite the record revenue, the stock faced selling pressure, trading down nearly 13% on the Monday following the results as investors reacted to the margin contraction. However, the long-term outlook remains tied to the company’s ability to execute on its Vision 2026-27.
Focus on AI: BFS is aggressively investing in AI to automate “rotoscoping” and “match-move” tasks, which are traditionally labor-intensive. Success here could restore margins to the 25% range by FY27.
Geographic Expansion: The company aims for further expansion in North America and Europe to capture high-margin “onshore” creative fees while offshoring the heavy production to India.
Valuation: At a P/E ratio of approximately 16x-18x (TTM), the stock is considered “fairly valued” by some analysts, provided that the current cost pressures are indeed temporary investments rather than structural shifts.
Conclusion
Basilic Fly Studio’s Q3 FY26 results represent a “growth-first” phase common in the high-demand VFX industry. While the 86.5% revenue growth proves that BFS is winning market share from global competitors, the 28.9% QoQ drop in profit serves as a reminder of the rising cost of top-tier talent. For investors, the key monitoring point will be the progress of “Project Hybrid. If the promised 50% cost reduction materializes by July 2026, the current dip may be viewed as a strategic entry point.