Sify Technologies Limited (SIFY) Earnings Call Transcript & Summary

Greetings. Welcome to the Sify Technologies Financial Results for First Quarter FY 2026 and 2027. [Operator Instructions] Please note, this conference is being recorded. I would now like to turn the conference over to your host, Praveen Krishna. You may begin.

Thank you, Holy. I would like to extend a warm welcome to all our participants on behalf of Sify Technologies Limited. I'm joined on the call today by my Chairman, Mr. Raju Vegesna and by Executive Director and Group CFO; Mr. M.P. Vijay Kumar. Following our comments on the results, there will be an opportunity for questions. If you do not have a copy of our press release, please call Luri Group at 1 (646) 8242-856, and we'll have one to you. Alternately, you may open a copy of the release at the Investor Information section the company's corporate website at www.sifytechnologies.com/investors. A replay of today's call may be accessed by dialing in on the numbers provided in the press release or by accessing the webcast in the Investor Information section of the Sify corporate website. Some of the financial mess referred to during this call and in the earnings release may include non-GAAP measures. These results for the year are according to the IFRS, and will differ somewhat from the GAAP announcements made in previous years. The presentation of the most directly comparable financial measures calculated and presented in accordance with GAAP and a reconciliation of such non-GAAP measures and of the differences between such non-GAAP measures and the most comparable financial measures is presented in accordance with GAAP will be made available on Sify's website. Before we [ continue here ] I would like to point out that certain statements contained in the earnings release and on this conference call are forward-looking statements rather than historical facts and our protector risks and uncertainties that could cause actual results to differ materially from those described. With results with respect to such forward-looking statements, the company seeks protections afforded by the Private Securities Litigation Reform Act of 1995. These risks include a variety of factors, including competitive developments and risk factors listed from time to time in the company's us reports and public releases. Those lists are intended to identify certain principal factors that could cause actual results to differ materially from those described in the forward-looking statements but are not intended to represent a complete list of all risks and uncertainties inherent to the company's business. I would now like to introduce my Chairman, Mr. Raju Vegesna. Mr. Chairman?

Thank you, Praveen. Good morning, everyone. Thank you for joining us on the call. India's digital transformation is entering a phase of situation at scale. What was once a digital transformation agenda has now become a business imperative with organizations investing in technology to improve productivity, resilience and customer experience. The country continues to benefit from a unique combination of progressive policy initiatives, expanding digital infrastructure and a deep pool of technology talent. As [indiscernible] options gathers pace, the need for secure, scalable and interconnected digital infrastructure will become even more critical. This presents a significant opportunity for India to strengthen its position as a global technology innovation lab. At Sify, we continue to align our investments with these long-term trends. Our integrated portfolio of data centers, network and digital services enables us to support customers as they've modernized their technology environment and prepare for an AI-enabled future. India is no longer preparing for the digital future, it is actively shaping it. Sify remains committed in building the infrastructure and capabilities that will help power this next chapter of growth. Let me now bring our Executive Director and Group CFO, Mr. M.P. Vijay Kumar, to explain both the business and financial highlights of this quarter. Vijay?

Yes. Thank you, Chairman. During the quarter, we continue to strengthen the operational foundation of our businesses through disciplined execution, improved resource utilization and targeted investments across each of our portfolios. We continue to invest in capacity expansion, network modernization and technology platforms that position us to address emerging demand from AI, cloud, and data-intensive workloads. At the same time, we remain vigilant in managing costs, optimizing cash flow and enhancing operational efficiency across the organization. While investment in infrastructure and talent continue to influence depreciation, interest and people cost. These are aligned with our long-term growth objective. And supported by a prudent approach to risk management and financial planning. Our priority remains unchanged, maintaining a strong balance sheet, preserving financial flexibility and creating enduring value for shareholders through disciplined growth and responsible stewardship of capital. Let me now expand on business highlights for the quarter. The revenue split between the 3 better was: Network Services, 39%; data center co-location services, 42% and IT digital services, 19%. The data center subsidiary sold 5-megawatt of capacity in the quarter. And as of 30th June 2026, Sify provides network services via 1,238 fiber nodes across the country, a 7% increase over same quarter last year. A detailed list of our key wins is recorded in our press release, now live on our website. Let me briefly sum up the financial performance for quarter 1 of financial year '26, '27. Revenue was INR 1,235 million an increase of 15% over the same quarter last year. Adjusted EBITDA was INR 3,005 million, an increase of 42% over the same quarter last year. Profit for the quarter was INR 65 million. Capital expenditure during the quarter was INR 6,708 million. Cash balance at the end of the quarter was [ INR 4,597 million ]. I will now hand over to our Chairman for his closing remarks. Chairman?

Thank you, Vijay Kumar. With our integrated portfolio of services. Sify is well positioned to support enterprises as they build resilient, scalable and future-ready digital ecosystems. I would like to express my sincere gratitude to our customers, shareholders, partners and employees and all other stakeholders for their continued trust support and confident in Sify. Together, we remain committed to contributing to India's digital future and capturing the opportunities that lie ahead. Thank you for joining on this call. I will now hand over to the operator for questions. Operator?

[Operator Instructions] Your first question for today is from Greg Burns with Sidoti Company.

Do you have an update on the potential timing for the Sify Infinite spaces IPO?

Yes. As far as the IPO timing is concerned, the bankers are actively evaluating the right time where the market appetite will be good, and we'll appreciate the quality of the asset we are. From the company side, we stay ready for listing once the bankers advise us on going ahead.

Okay. And then you mentioned you sold 5 megawatts of capacity in the quarter. how much capacity is currently live and operational? And what is your current design capacity of existing data centers? And then maybe can you give us an update on what you expect to go live or how much capacity is currently under construction and, I guess, expected to become operational in the next 12 months?

Yes. So the capacity which is designed and ready is 188-megawatt the operational live revenue-generating capacity is 134 megawatts and the capacity, which will get delivered in this fiscal will be about 100 megawatts. And there is another 150 megawatts of capacity under construction

Okay. Okay. So do you expect the CapEx to remain at the level you had in this first quarter for the remainder of the year? Or is it going to maybe ramp up from here?

The CapEx is likely to be higher for the remaining part of this year as we get ready to deliver capacity for the customers.

Okay. And can you just maybe give us your thoughts on what are the primary differentiators for Sify ? Like why is I winning in the market? Maybe what are the reasons that you think that Sify differentiates itself and how you're driving success.

No, I think there is some uniqueness with our -- in the market presence for about the time of more than 20 years. And the existing hyperscalers and the enterprises that makes us different. And also our presence in all our key markets like Mumbai, Chennai, Noida, Hyderabad, Bangalore and small portion in Kolkata. That makes us unique. -- vision and also our having a network around our data connectivity availability. So it is -- it's not any onetime kind of thing because the way the Sify portfolio has all these things and also we have cable landing stations we are building. So as an integrated player, complete, having a data center network and having a good power availability story that will help to win such kind of a data center deal.

All right. And then I know you're in all the major hubs, but what is the opportunity for edge capacity, building out data centers in smaller markets, like are -- is there an opportunity there for you? And is that currently on your road map?

Yes, We have already opportunity there. We already completed 2 such data centers in Lucknow and Chandigarh. And we are also constructing 2 more. So we are having a plan about building across India in Tier 2, Tier 3 cities, about 10 to 12 edge data centers over the next few years. So these opportunities because India not only depending upon the 6 major metro cities. But this secondary city is also very important. So our presence, we are billing strategically 2, 3 edge data center per year. That's what we are looking at.

Your next question for today is from Prateek Singh with IIFL Capital.

Hello. So I understand that the sold capacity has now gone to 134. The installed capacity, which was 140 end of FY '26, what would that number be?

154.

Okay. And the design capacity has been at 188 megawatts for now. So I just wanted to understand how does it work? So we first focus on completing the installed capacity and then build new capacity or both of these cannot be done parallelly?

I was answering the previous speaker. There is another 100-megawatt of capacity, which coincidentally will be both design plus installed capacity, which will be delivered this year and another 150-megawatt of capacity, which is under construction.

Okay. So can we assume that from a sole capacity of 134 right now, revenue generating capacity next year would be somewhere in the range of 220,2 30 for the entire year?

Yes, it should be north of that.