Phantom Digital Effects Limited (PHANTOMFX) Earnings Call Transcript & Summary

So, good evening and thank you. I'm Vaishnavi Vaity on behalf of AKMIL Strategic advisors. I welcome you all to the H1 FY '26 Earnings Conference Call of Phantom Digital Effects Limited. Today, we are joined by Mr. Bejoy Arputharaj Sam Manohar, Chairman and Managing Director; Mr. Binu Joshua Sam Manohar, Whole-time Director and Chief Operating Officer; Mr. Anantharaman, Vice President, Finance; and Mr. Rajesh Samal, CS, who will share the insights on the company's performance, the operational highlights and its strategic outlook. With this, I hand over the call to Rajesh Sir. Over to you Sir. Thank you.

Yeah. Thank you. Yeah, good evening to all the distinguished investors and analysts. So, I'm Rajesh Samal, Company Secretary and Compliance Officer of Phantom Digital Effects Limited. On behalf of the management team, I extend a warm welcome to all of you for our H1 FY '26 Investor Analyst meeting. And today's session holds tremendous significance as we present company's financial performance, strategic milestone and expansions updates. And we all thank you for your time, trust and consistent engagement with Phantom Digital Effects Limited. Today's meeting structure is opening remarks from our chairman and Managing Director, Mr. Bejoy Arputharaj; and financials overview, so -- and lastly the question answer session to address the investor queries. The company committed to high standards of corporate governance and transparency; we consider investor interaction a vital part of a communication philosophy. Your insight guide us and strengthen our journey as we scale Phantom effects into global integrated VFX and creative powerhouse. So, with this I request our Chairman and MD, Mr. Bejoy Arputharaj to deliver his open remarks. Thank you.

Thank you, Rajesh. Ladies and gentlemen, a very good evening to all of you, and thank you for taking the time to be with us today. There's always a privilege to speak with the people who believe in our journey, our ambition and the creative force that drives Phantom. For those meeting us for the first time, I'm Bejoy Arputharaj, Managing Director and Chairman of Phantom Digital Effects Limited. I'm joined today by our leadership team and our intention is simple, to walk you through not only the numbers, but the strategy and the momentum behind Phantom's evolution this year. Phantom has always been anchored in 2 unwavering strengths, creativity and technology, since 2011. These pillars have shaped our identity and positioned us as a trusted partner for some of the world's most respected studios and filmmakers. From our beginnings in Chennai, we expanded in Mumbai, Hyderabad, Bengaluru and China. And today with our acquisitions in the United States and Europe, Phantom has transformed into a global creative technology group with an integrated presence across the major film making hubs worldwide. One of the most significant milestones of the year has been the acquisition of Milk Visual Effects, it's boutique brand Lola Post. I'm pleased to share that the first tranche has been paid. The share certificates have been issued, and Phantom now holds full ownership. But importantly, this is not just a transaction, it is the addition of a culture of excellence that Milk and Lola have built over decades. These are among Europe's most respected creative studios admired for their artistry, technical depth and contribution to high value global content. Together, Milk and Lola bring an extraordinary legacy of recognition, including 2 Academy Awards, multiple BAFTA honors and Creative Awards, Emmy Awards, a prestige that we are proud to welcome into the Phantom family. Their award-winning pedigree, their creative philosophy and their leadership now strengthen the very core of Phantom's global identity. Equally important is the strategic access this acquisition unlocks. Milk operates across London, Barcelona, Bordeaux and Dublin. Lola adds strong UK depth through them. Phantom now gains meaningful access to mature European markets, supported by clients such as BBC, Netflix UK and Sky, as well as the benefits of UK Film and TV Tax Relief and European coproduction subsidies. This makes us more competitive, more scalable and far more globally aligned. We are also proud to welcome exceptional creative leaders into Phantom family. Oscar and Emmy winner Sara Bennett, BAFTA Oscar and Emmy nominee Rob Harvey. Their presence elevates the creative firepower across our studios. Another important milestone this year was the formal completion of our acquisition of Tippett Studio in June 2025. The integration is now complete across operational and creative functions, giving Phantom access to a Hollywood legacy and direct engagement with premier western clients. Tippett's heritage, Milk's European Excellence and Lola's British craftsmanship collectively form a global creative engine that is culturally rich and operationally unified. While our Western footprint expands, our Asian presence is equally strong. Our subsidiary in China positions us in one of the fastest growing VFX markets in the world, an incredibly important geography considering global OTT expansion and domestic Chinese film growth. Spectre Post in Bengaluru, originally designed to capture Tier 2 and Tier 3 clients, has exceeded expectations. Its exceptional service quality has earned the confidence of a far wider spectrum of clients ranging from premiums studios to independent creators. The result is a highly stable, scalable domestic pipeline that complements our international portfolio. In fact, on the domestic front, Phantom has contributed to many of major blockbusters of this year. Our Indian studios have become trusted partners for large scale productions, ensuring that Phantom remains one of the most recognizable VFX names in the country. This combination of premium global work and high-volume domestic work strengthens our resilience across economic cycles. To unify our global operations, we introduced Phantom Media Group as the umbrella brand that brings all of our studios together under one identity. Each studio retains its flavor and creative philosophy, but PMG aligns us under a shared vision and enables seamless collaboration across geographies. As part of this transition, we have also appointed a structured leadership group within PMG to guide Phantom and all its subsidiaries ensuring consistent creative direction and operational discipline across India, the U.S., the U.K., Europe and China. This framework is already strengthening coordination, accelerating decision making and unlocking the full potential of our integrated global network. Across PMG, our teams have contributed to some truly exceptional projects this year. On the international front, our portfolio includes iconic franchises and production such as Mandalorian and Grogu; Good Omens Season 2; The Witcher Season 4; Ironheart, Heads of the State with Milk; Walking with Dinosaurs with the Lola Post; Creation of Gods, Demon Force; Star Wars: Skeleton Crew with Tippett studio; and Alien Romulus, also with Tippett. On the domestic side, we have been equally active, contributing to high visibility titles such as Kantara 2, They Call Him OG, War 2, Coolie and several other large-scale production. Our upcoming slate is equally strong. We are currently contributing to Shree. Rajamouli's Varanasi project and other major Indian production houses, whereas internationally several high value productions for Disney+, Amazon Studios, Netflix, BBC Studios. Many of these projects are already under execution or have recently been delivered, representing our strongest pipeline to date. Innovation of course remains central to everything we do. We are developing a few in-house AI tools designed to dramatically improve efficiency across our global pipeline. Early results have been extremely encouraging, showing meaningful reductions in repetitive tasks. I will show you a small demo on that in a short while. Faster asset creations, deageing and face replacements with much quicker turn around cycles. What makes this even more promising is that AI and VFX is no longer theoretical. It is commercially impactful. It helps studios deliver more work in shorter time frames, optimize resource allocation and ultimately improve margins without compromising creativity. The adoption of Curve in our industry is accelerating and Phantom is positioning itself at the forefront of this transition. All of this brings us to the core of our evolution. Phantom today is far beyond a traditional VFX studio. We are a global creative technology organization with world class talent, seamlessly integrated operations, AI enhanced workflows and the presence across every major VFX market. These strengths make us one of the most agile, scalable and future-ready networks in the industry. Now let me move to our financial performance for the half year. This year's results reflect the depth of our diversification and the strength of our teams. Our total consolidated income for H1 FY 2026 grew by 140.93%, year-on-year to INR 84.98 crores. Including other income, we closed at INR 88.29 crores compared to INR 36.65 crores in H1 FY 2025. EBITDA rose from INR 16.32 crores in H1 FY 2025 to INR 28.62 crores this year, with a margin of 32.41%, and net profit increased from INR 8.27 crores to INR 20.68 crores with a margin of 23.43%. The earnings per share moved from INR 6.09 last year to INR 13.87 this half year. The year-on-year growth is strong, but what is even more encouraging is the consistency and profitability that our group structure is beginning to unlock. Operationally, our receivables continue to remain disciplined. Outstanding receivables as of 31st March 2025 stood at INR 42.09 crores, out of which we have collected INR 27.54 crores as of September 2025, reflecting a 65%-ish collection rate. From the INR 43.62 crores of unbuilt revenue, we have billed and collected INR 25.75 crores as of November, representing a 59% collection rate. Additionally, we collected INR 19.53 crores against H1 FY '26 sales of INR 47.11 crores, achieving a 41.5% collection rate. As a result, the current outstanding receivables as of 19th November stands at INR 61.49 crores. This performance stands as a positive indicator of market revival. However, with stronger integration, centralized follow-up mechanisms and the shift towards 90-day collection cycles, we are already seeing tangible improvements. We expect this trend to strengthen further, and investors can expect a more predictable and steady cash flow profile in the quarters ahead. We have an order book of INR 201.32 crores as of October 2025 with nearly 80 percentage of this led by international projects. In addition, across our wider business portfolio, we currently have INR 817 crores worth of projects in the bidding pipeline. Together, this gives a strong visibility for the upcoming quarters, backed by high potential projects and the scalability of our integrated studios. With Tippett Studio and Milk now fully part of Phantom, their contributions will meaningfully enhance our consolidated performance based on our trajectory at the beginning of the year. And the work currently underway across PMG, we expect solid growth across both standalone and consolidated operations for FY '25 and '26. Now I would like to show a small presentation on what PMG is, because this is recently announced, and I didn't get an opportunity to explain -- a lot of investors and my friends to explain about what is PMG and why it is the need of the hour. So I would like to give a small presentation on what PMG is all about and give you a small demonstration on our recent improvements -- I mean, the recent progress with AI. So Phantom Media Group, as you all know, is part -- is a collective of all the VFX studios here. We call it -- we felt that Phantom is just being looked at as a Indian company in the global arena. And we wanted to position us as an American and European company as well to attract more business from those regions. So, we wanted to position Phantom in the global arena in a different way. So we came up with an idea of coming together as a collective in the name of Phantom Media Group. So we are not rebranding or we are not registering this as a new company, but it's just an umbrella name. We are just coming together as a collective. So, under Phantom Media Group collective Tippett Studio, Milk, Lola, Phantom Effects and Spectre Post will operate. So, as you all know, Tippett is completely focusing on the North American region and the projects which are surrounding North American region. And Milk is focusing on North America and also the European and U.K. region. Lola is same. And Phantom is a global company, but we are more focused right now with our American counterparts. We don't have to pitch Phantom separately, so we are more focusing on the Middle East and the Australian and the Chinese continents. And Spectre post, as you know, we are promoting that and positioning the Spectre Post as a domestic company from India. And as I said, I know there has been 3 -- 4 Academy Awards, actually. So 3 Emmy awards, 5 BAFTA awards and we have won a lot of -- a number of awards for Tippett and Milk together. This is our presence across the globe right now. So we have 4 offices in India and Milk is headquartered in London with offices in Dublin, Bordeaux, Barcelona. And Phantom has an office in Beijing as well. And Tippett is based out of Berkeley and Toronto and Los Angeles. So that's Mr. Phil Tippett, who is the founder and chairman of Phil -- Tippett Studios, and he's been in the industry for more than 40 years. He's a legendary guy. He has a reputation of working from movies like Willow, Jurassic Park, and almost all the major filmmakers across the world knows him. So this is our leadership team. We have recently been joined with -- after Milk's acquisition, Mr. Chris Burn has took charge as Global Managing Director of Phantom Media Group; and Mr. Roo Knight has took charge as Global Director of Business; and Mr. Andrew Harvey has too charge as Global Executive producer; and Ian, who has been Vice President -- Executive Vice president of Phantom has been given charge as President of Phantom Media Group. And Caroline Bisson, who has a great reputation working for a lot of major companies, has been recruited as Global Director of marketing for Phantom Media Group; and Gary Mundell, CEO of Tippett, will continue serving as CEO of Tippett. And these are the key creative people here in Milk. So, Sara Bennett, one of the Academy Award Winner, will continue serving Milk as CCO. She's Chief Creative Officer and VFX Supervisor; and JC Jean-Claude and Neil will continue serving as VFX Supervisor. So we are retaining all the major stakeholders and key leadership people from Milk and also Tippett. So Mr. Rob Harvey, he's an Oscar-winning supervisor. He's the founder of Lola Post. He's continuing to serve as the founder of Lola actually. And Mr. Andy, he's heading our French office; and Mr. Marc, he's heading our Tippett as VFX Supervisor. And Mr. Juan, who is heading our Chinese operations; and Mr. Mohinder, who has come from a lot of big studios, is heading our creative team here in India. I would like to show a small video clip of [indiscernible]. [Presentation]

Bejoy, sir, only video is available. We can't hear the audio.

Oh, this is just a video I will...

Okay.

You cannot hear the audio. Now, can you hear the audio?

Yes, sir. [Presentation]

So what you have seen here is collective of all the studios Phantom, Tippett and Milk's really as Phantom Media Group. So, as I said, you know, we are positioning PMG, Phantom Media Group, as one collective umbrella, and this has really started showing progress in terms of business development. And we have been able to do big breakthroughs through PMG. I would also like to show a small video of our latest AI progression. [Presentation]

So this is the use of AI, the VFX shots. So, we have been one among the very few studios who have adapted AI and implemented into the pipeline. We recently met with one of the major, very major OTT platforms and then they mentioned that you guys are light year ahead in terms of AI -- implementing AI into the pipeline. So what you see here, the left side of it is the traditional animation. Can you just go slightly, give me the mouse. So, what you see here is a traditional animation and what you see here in the right side is the AI-generated output. So, we have figured out a pipeline where AI can successfully be integrated into the traditional methodology of visual effects. So, this way we have more control over cameras, consistencies and action blocks and everything. But you know this is not yet there in terms of high-quality film production. But we are using this for corporate -- I mean the previsualization, which we call as a -- it comes in the preproduction stage of filmmaking. So, we are using that here and we are also using this in the commercials, which is not -- except for big screens, we are -- we have the quality to meet. So, we are cutting down -- so this is something that has been done completely in house, whatever you're seeing, everything is done completely in house. So what you're seeing here is a video of what we shot here in our studio. So, one of our artists is having a couple of toys, cars and from that we have generated this video. So this is the Mickey Mouse doll has transformed into the final output there. We have also created a lot of AI tools in house. I'll show you a quick video on that shortly. This is the AI-generated commercial we recently worked on. [Presentation]

Instead of being just a service provider, we would be actually created a complete commercial for -- recently for lot of our clients. So AI has helped us to improve from just being a service provider to content creators in a whole way actually. So this is a technology that this -- we have from this to one of the major OTT platforms and they're like really very surprised to see this results. We can -- in real time we can replace faces. And this really helps out in terms of shooting and all. So we have successfully implemented AI into the pipeline to create -- increase productivity actually. And also, we have [Audio Gap] successfully created in-house AI tool set, which can create images, create videos. So, this is something that completely works inside in-office. We don't have to go online. This is an offline method. So we have our own software now, which probably might -- we might bring into the market very soon. We are working on it. So now we are able to create a lot of connectivity in this. And also inside VFX pipeline we are using this tool set. It's a very effective way in raising productivity. [indiscernible] complete software that has been created [indiscernible]

Sir, can we start with the question-and-answer session?

So, in closing, I'd like to extend my heartfelt thanks to our teams across India, U.S. and U.K. Their hard work and creativity are the reason Phantom stands where it does today. And to our investors and partners, thank you for believing in us. Now the floor is open for question-and-answer sessions.

[Operator Instructions] So, first question is from Mr. Achuth. Mr. Achuth, if you are speaking, we can't here you.

Am I audible now?

Yes.

Okay. So my first question is like, as you guys have shown the AI video, like I want to understand like what is the future like? We are focusing more on the VFX or the AI?

So VFX -- see, first of all, you should understand the difference. Like we are using ChatGPT in our day-to-day life. So you cannot ask like whether your life will be shifted towards ChatGPT relying on it. So it's like it's just a tool. So we are going to implement AI as a tool into the VFX pipeline. So we will be creating visual effects using AI as a tool, not replacing any VFX artists or anything, but we are improving productivity. As I said, there are certain stuff that we do in a traditional way, takes months' time. So there are certain things that we do in a traditional way takes months' time, which has been reduced to weeks now. And we were now able to create a complete commercial. As you saw, one customer came to us with just a sample of their sets. So we built them a complete portfolio of what their event is going to look like. So they were able to promote their event in a very successful way through that. So we are transforming ourselves from just a service provider also to a content creation company. That doesn't mean that we are completely replacing VFX. VFX is always going to be an amazing tool for films and whatever fantasy elements that you are seeing in the films, that is going to stay back. But whatever we are creating using AI complete commercials, instead of creating something in CGI completely, we are preferring to go with AI on several shots, not everything. There are certain things that is possible with the AI and there are certain things that is not possible with AI. So we are just being very picky about it and moving ourselves along with the tide of AI.

Okay. And can you also like explain like where exactly we can use only AI without VFX?

Only -- exactly with AI -- where AI means probably, for example, if you remember seeing that a particular shot where lady is showing her ring. So the customer came to us with a ring model, and we generated the complete video of that commercial using the same ring model. So it has been a traditional shooting methodology before. So there is no visual effects involved in that particular shot. Even if it is a traditional shooting methodology, people just shoot it and then they telecast it. Now that has been reduced. Of course, AI has its own limitations. If a director wants a particular emotion, director wants a particular expression to be done, AI has a lot of restriction towards it. But this has been very helpful with clients who are operating with limited budgets or doesn't have that kind of opportunity to go into a big agency and shoot something by themselves. So this is helping them in terms of creating content, but not replacing any high-value commercials or definitely not visual effects for films.

Okay. And my second question is like with these acquisitions with full realization, how much revenue we can make in H2 and FY '27?

We are projecting around INR 240 crores including the Milk. So that's what the projection as of now. It's very conservative. We planned for INR 160 crores is the Phantom including of Tippett. So now Milk is coming into the picture from October effective. So INR 80 crores we are expecting from the Milk, and we will close at INR 240 very conservatively, this number is consolidated.

This is for FY '26, right?

Yes.

For FY27, can you provide any number?

We are expecting around INR 300 crores to INR 350 crores, which we are expecting at -- in the coming year.

Okay. How much from Milk and how much from Phantom?

It's basically -- it will be an increasing portion of Tippett and Milk. No. See, you cannot see separately as Phantom because we are basically a support system for Tippett and Milk because that's how we were able to increase our top line and also the profit margins. So basically, more of Phantom's execution power is going to be spent on Tippett and Milk going forward.

Okay. So basically, we need to know really on a consolidated basis only.

Yes. Yes.

Next question is from Mr. Aditya.

This is Aditya from Avora SME Fund. Firstly, a word of appreciation because there's been a lot of good work from Phantom side. So a lot of kudos to you and your team as well as the strategic acquisitions, which seem to be doing pretty well. I have 2 questions. The first one is about this global expansion itself because now that we are present in multiple geographies, there must be some challenges that we might be facing in terms of integration, in terms of both work style as well as culture. So maybe if you could shed a light on that.

Definitely. So in terms of technology and structure, this integration of Tippett happened -- started happening from last year onwards. So we have successfully completed our integration. We have developed pipeline and tool sets, which works seamlessly because this was very much possible because Phantom was already working with a lot of international artists also before. And also we were sharing files and data between multiple offices in India itself. So we have already developed a working pipeline between -- which will work -- which will actually. So Phantom actually have already integrated this pipeline working for multiple studios across India already. So it has not been a big challenge for us to integrate the same between our offices across the globe. We have successfully implemented that, developed tools and we are still developing a lot of tools to improve productivity as well. But as of now, we have successfully implemented and started collaborating and working on a lot of projects already last 4, 5 months, we have started -- already started working with Milk also. So the integration of pipeline has been successfully completed. And in terms of working culture, we are definitely working on that. We have recruited new HRs who can work on different time lines. And we have HRs who are working from Tippett. We have a dedicated HR and Head of HR and -- from Milk. So we have restructured our organization structure and the reporting system. We are continuously improving on the cultural part of things. But as of now, it's all going great, and we have figured out a lot many ways to work together as one company and also bring the good things that are available with other companies, sharing knowledge. We have introduced a shared learning methodology system, which is obviously another software that we have deployed across the globe. So people now can share knowledge, people can interact with each other, get their doubts cleared. So there are so many things that is already deployed and there are certain new things that we are now implementing going ahead.

Great. Sounds good. So my next question is about the plans for the company to migrate to the main board. If -- do we have any such plans? And if so, what is the expected timeline?

Yes, this is Rajesh, Company Secretary. So the company is in process to migrate from SME to main board. So we are already in process. So hardly maybe by December last week or first week of January, we'll come with main board. We are in process. Because we are fulfilling all the eligibility [ criterias agency ] has framed. So we are already in process, and we'll -- maximum by first week of January, we will be in main board.

We are hoping to do that. By January maximum, we'll be transforming to main board.

Next question is from Ms. Simran.

Am I audible?

Yes.

Yes.

Okay. So my question is that we raised INR 140 crores in QIP in the last 2 years to fund the acquisitions and working capital of the parent and the subsidiary companies. And we are close to about INR 160 crores to INR 170 crores of annual revenue run rate. So if we want to reach to a level of suppose INR 400 crores to INR 500 crores in a span of 4 to 5 years, so what is your strategy to fund this growth through internally generated profits and not relying much on the external funds?

No. These external funds are all used for acquisitions and infrastructure building. So going forward, probably there might be some need. I wouldn't say that there won't be any need for investments in infrastructure going forward, but already Milk is one complete studio already with very good infrastructure. Probably we are building some more setups with systems and upgradation to support our U.S. and Indian entities. But other than that, there will not be much of any investments going into these companies going forward. So there will not be any big investments going into these companies other than marketing. We are having -- we are working on some good budgets to position us as PMG and the global collectives. So we will be investing more on the business than the infrastructure.

All right. Because if we see that we raised INR 140 crores of QIP and also our borrowings have increased. So if we were not able to collect the receivables well, then our dependence on the external funding can increase and it may become unsustainable to some point since it creates a pressure on the balance sheet and dilute the earnings.

Yes. Yes, madam, actually, we are tightening our credit policy. So going forward also, we will’ also have a positive collection from this side also. And so far, relating to the QIP part, whatever the proceeds that's being utilized as per the objectives, which is already mentioned in the document. So relating to that, relying more on the external funds, so we are also in process to strengthening the credit policy. So that will have a positive impact in the cash flow going forward.

Okay. All right. My second question would be, any update on our gaming segment? Have we received orders on that side?

Regarding gaming, we are already servicing with gaming companies for more than 8 years now. So that service part is still happening, and we are working with a lot of companies producing assets and creating concepts and creative sides of things and all we are doing already. This year, we have already initiated some progress to come up with a small gaming team from our end. We initially had a plan to acquire a small company, but that's -- we are having a small hiccup finding very good companies here. So we are doing some small initiative on our end forming a small team, and we'll be starting up a small gaming division within Phantom itself.

Can you give me a time line of that?

Probably by -- before February, we'll be able to complete it.

Okay. Also, you mentioned in the investor presentation that you have partnered for several projects in the China market. What is the size of the orders there?

We are looking on around $17 million of orders and that we have secured some of $10 million, which we are executing the contracts as of now. So the -- most probably this year, we'll be getting a better orders as well because the China market, we are just infused -- just stepped in. So we started exploring ourselves and we are looking forward like the Fengshen 1, which we have done it, the 2 -- Fengshen 2, which we have done, and the Fengshen 3 is going to come on. So that also is going to add up the kitty of Tippett as well as India Phantom. So this increase in the revenue will shown in the balance sheet, the P&L basically, in this year.

All right. All right. Okay. So this was a concern investors, but...

Can we allow others also, Ms. Simran, so that...

Sorry, can you -- pardon?

Yes. Can you come back again in the queue so that others also can raise their questions, please?

Mr. Vikas, you can go ahead and ask the question.

Yes. Am I audible?

Yes.

Yes.

Okay. Yes. So my first question is, I want to need more details on the Milk and Lola acquisition. As you shared in the report, we are acquiring for a price, but there is also you -- we need to pay for liabilities and the existing -- the liabilities and maybe you need to take care of their working capital. So can you give the numbers, what will be these expenses going forward?

Yeah. So the Milk acquisition is $7.5 million, including the liabilities which they are holding it, okay? So $2.7 million, which we are expecting as an infusion of the working capital for them, so it's total of $10 million, which we are expecting. So now there was a deferred payments, which we have processed. So the first tranche of payment has been released, and we are officially owner of Milk, yes. So the payments will be on the tranches basis. So we'll be closing that liabilities by December 1 tranche of it, and the second trench, third trench will be followed, yes.

Okay. So this $10 million will go into how many tranches?

It will be on 3 tranches.

Okay. Got it. On the same question, I want to ask what will be our EBITDA margins since we have Tippett as well as Lola and Milk. So what will be the EBITDA margin of these groups we are seeing in the coming years once we integrate it fully?

Okay. On the consolidation basis, we are looking on 44% of EBITDA and 25% conservatively PAT.

Okay. So basically, since normally all the European and U.S.-based studio have lower margin, so we are able to maintain margin because of outsourcing work to Indian studio. Is that correct?

Yes. We are trying that strategy out from -- trying to pull the market from the Hollywood and do from the Phantom's side from Indian entity, which will support, and it will increase the profit. So conservatively, the PAT 25%, which I've told you, we are trying to make sure that the cost effectiveness and efficiency is worked on. So the percentage gradually, it will improve by the coming years.

Okay. My second question is on the -- as you said, we are conservatively targeting INR 240 crores of revenue. What will be EBITDA and PAT margin by year-end we can expect?

It's the same thing I've told you, 44% and 25%.

Got it. One more thing I want to know is about our -- you talked about expansion in UAE and offices. Can you give light where are we with the office and how soon or what stage it is in?

You are asking about the Dubai office?

Yes, Dubai office.

Okay. So we are working on a special project in the Middle East, which I cannot reveal right now. So -- but that is already in the process of rolling out. So we have office already -- a functioning office already in Dubai. But we haven't aggressively started recruiting more people. We have right now a few business development people working from there for us. So that's the progress as of now. But we have successfully secured a couple of major projects from the Middle East, which we are promoting through Tippett's name because people there love to work with European or American companies. So -- and also, we don't want to undervalue ourselves just throwing -- but just showing us as an Indian company. So we are positioning us as an American company, and we have secured a couple of very good projects there.

[Operator Instructions] Next question is from Mr. [ Arnab ].

I hope I'm audible.

Yes.

So firstly, I would like to understand like when we are reporting our stand-alone, are we realizing revenues at, let's say, Tippett, however, the costs we are reflecting on our stand-alone entity, and that's why the stand-alone numbers look pretty skewed? Is that the reason or there is something else going on?