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Digikore Studios IPO entails to raise Rs. 30.48 cr. and comprises a total of 17,82,400 equity shares, including a fresh issue of 1,260,800 equity shares and an offer for sale ₹8.92 Cr (OFS) of 5,21,600 equity shares. Digikore is a Visual Effects Studio that offers a full suite of visual effects services mainly for export markets.

About Digikore Studios IPO:

• Digikore with production facility in India, specializes in delivering Visual Effects (VFX) for a diverse range of projects such as Films, Web Series, TV Series, Documentaries, and Commercials.
• 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.
• As a TPN-audited VFX studio, it offers a comprehensive suite of visual effects services, overseen by our experienced production team.
• As on July 31, 2023 it had 357 employees largely based in Pune.

Financials: Digikore Studios IPO

Anchor

Digikore Studios IPO: Salient Points

• Promoter holding will come down from 93.38% to 93.38% after the IPO.
• Focus of company now is mainly on export market.
• Had earlier catered to needs of Boolywood for VFX but later decided against it.
• Provided visual effects for Hollywood movies and shows like Stranger Things, Deadpool, Star Trek, Thor: Love and Thunder and Titanic.
• It is one of the leading players in the VFX segment with international and domestic services and has worked for production houses like Disney/Marvel, Netflix, Amazon, Apple, Paramount, Warner Bros., Lions Gate, etc.
• The company has embarked on a new venture known as Digikore Matchmaking, extending its portfolio to encompass new dimensions of business endeavor.
• Digikore Studios has displayed good financial performance in recent years.
• It reported revenue of Rs 35.56 crore in FY23 up from Rs 24.88 crore in the previous fiscal year. The net profit for the same period surged to Rs 4.37 crore from Rs 46.54 lakh in FY22.
• The company has concluded a pre-IPO funding round, attracting investments from investors including Nikhil Vora, Vijay Khetan, Mrinal Singh, Pramod Kasat and others in Aug 2023 @Rs. 164 per share.
• Top 10 customers contributed 61.76%, 87.97% and 90.34% of its revenues for the financial year ended March 31, 2023, March 31, 2022 and March 31, 2021 respectively, whereas, the top five customers contribute 45.39%, 75.28% and 75.63% of revenues during the financial year ended March 31, 2023, March 31, 2022 and March 31, 2021 respectively.
• Major portion of the revenue generated from operation are through exports i.e. 98.34%, 51.58% and 99.59% for financial year 2022-23, 2021-22 and 2020-21.
• It intends to use the entire Net Offer Proceeds towards meeting the working capital requirement, general corporate purpose and Offer Expense.
•  Key Performance Indicators

Peers:

• Compared to recently listed Basillic Fly & earlier listed Phantom Digital, it has lower margins but is also seeking somewhat lower valuations.
• Digikore Studios IPO is coming at a PE ratio of 25x(fy23 earnings) and 10x (Fy24 annualized) . revenues and profits has increased many times in q1Fy24.
• Another company, the recently listed, Basilic Fly Studio debuted at a robust premium of 179% on the NSE Emerge platform and subsequently even moved up further.
• I intend to apply in Digikore Studios IPO subject to availability of funds.
• GMP as reported on social media has been around Rs. 150.
• Sarthi Capital Advisors Private Limited is the lead manager with quite a decent record of good listing and performance subsequently with the exception of Spectrum Talent Management IPO. Past issues handled by them include Spectrum Talent Management, Homesfy Realty Limited, Frog Cellsat Limited, P. E. Analytics Limited, Marvel Decor Limited, Servotech Power Systems, Aarvi Encon Ltd, Vivo Collaboration Solutions Ltd, Brand Concepts Limited etc.
• SME IPO are quite illiquid and volatile and exit options sometimes is delayed. Greed at end of Lead managers, Promoters and investors is increasing and there is flood of SME IPOs now.

Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.