Sify (SIFY) Q2 2027 Earnings Call Transcript

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DATE

Wednesday, October 28, 2026

CALL PARTICIPANTS

• Chairman - Ananta Koti Raju Vegesna
• Executive Director and Group Chief Financial Officer - Muthu Raju Paravasa Raju Vijay Kumar
• Sustainability, Investor Relations, and Public Relations - Praveen Krishna

TAKEAWAYS

• Revenue -- INR 13,798 million, representing 31% growth year over year.
• Adjusted EBITDA -- INR 3,131 million, an increase of 33% versus the prior year quarter.
• Net Profit -- INR 40 million, compared to a loss of INR 275 million in the second quarter of the previous fiscal year.
• Capital Expenditure -- INR 8,573 million, primarily directed toward expanding data center capacity and modernizing network infrastructure.
• Cash and Bank Balances -- INR 5,868 million as of September 30, 2026.
• Network Services Revenue -- INR 5,879 million, driven by demand for data center interconnect services and hyperscale growth.
• Data Center Services Revenue -- INR 5,172 million, accounting for 37% of total revenue.
• Digital Services Revenue -- INR 2,747 million, contributing 20% of the top line.
• Data Center Operational Capacity -- 136 megawatts as of the end of the quarter.
• Contracted Backlog -- 113 megawatts scheduled for delivery over the next three quarters.
• Total Design Capacity -- approximately 300 megawatts when including current construction and the contracted backlog.
• Fiber Nodes -- 1,264 nodes across India, representing a 6% increase year over year.
• Segment Profit - Data Center Services -- INR 2,301 million, reflecting high demand for carrier-neutral facilities.
• Segment Profit - Network Services -- INR 915 million, as the company expanded its national long-distance fiber network.
• Segment Result - Digital Services -- INR 19 million, returning to profitability from a loss of INR 284 million in the prior year quarter.
• Net Debt -- INR 45,331 million, an increase from INR 31,395 million as of March 31, 2026, due to infrastructure investments.
• Interest Expenses -- INR 1,142 million on borrowings and lease liabilities, reflecting higher debt for capacity building.
• Land Bank Capacity -- over 1 gigawatt across seven cities, according to management estimates of existing holdings.
• Investment Ratio -- 80% to 20% between data center and network capital expenditures.
• Operational Milestones -- two edge data centers in Lucknow and Mohali are now live.

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RISKS

• Vijay Kumar stated, "While capacity expansion and capability building have implications for depreciation, interest, and manpower costs, we remain focused on ensuring that capital allocation is supported by sound financial planning," indicating potential pressure on profitability during heavy investment phases.
• Vijay Kumar warned that pricing pressure is inherent to the nature of the network business as it scales and unit economics evolve.

SUMMARY

Sify Technologies Limited (NASDAQ:SIFY) reported a 31% increase in revenue for the second quarter, reaching INR 13,798 million, as it aggressively expanded its data center and network infrastructure. Management indicated that demand for data center space in India is currently exceeding supply, which has supported improved pricing and returns on investment. The company is executing on a contracted backlog of 113 megawatts in its data center segment while modernizing its network to carry AI workloads. Capital expenditure remains high at INR 8,573 million, contributing to a rise in net debt to INR 45,331 million as the firm builds toward a 300-megawatt total design capacity.

• Management noted that the IPO for Sify Infinit Spaces is being timed by bankers, with CFO Vijay Kumar stating, "The bankers would like to time the issue at the appropriate time."
• Chairman Vegesna emphasized the role of artificial intelligence in future infrastructure needs, stating, "As AI adoption gathers pace, the need for secure, scalable, and interconnected digital infrastructure will become even more critical."
• The company is building its own national long-distance fiber network to support hyperscale growth and data center interconnect services.
• Management stated that the industry demand currently exceeds available supply, resulting in an absence of pricing pressure.
• The digital services segment is being transitioned into a portfolio of AI-led services, which management expects to scale and improve performance.

INDUSTRY GLOSSARY

• MW (Megawatt): A unit of power used to measure the capacity of a data center.
• Fiber Nodes: Connection points in a fiber optic network where data can be transmitted or received.
• DCI (Data Center Interconnect): Technology used to connect two or more data centers to share resources or provide redundancy.
• Hyper-scale: Large-scale data centers built to support massive computing and storage requirements, typically for cloud providers.
• Edge Data Center: Smaller facilities located closer to end users to reduce latency and improve performance for applications.
• IFRS: International Financial Reporting Standards, the accounting framework under which Sify reports its financials.
• Adjusted EBITDA: A non-GAAP financial measure that evaluates operating performance by excluding interest, taxes, depreciation, and amortization, along with specific adjustments.

Full Conference Call Transcript

Operator: Good day, everyone. And welcome to the Sify Technologies financial results for second quarter fiscal year 2000 26 through 2027. At this time, all participants are placed on a listen-only mode. And we will open the floor for your questions and comments after the presentation. It is now my pleasure to hand the floor over to your host, Praveen Krishna. Sir, the floor is yours.

Praveen Krishna: Thank you, Matthew. I would like to extend a warm welcome to all our participants on behalf of Sify Technologies Limited. I am joined on the call today by Raju Vegesna, chairman, and M.P. Vijay Kumar, executive director and group CFO. Of Sify Technologies. 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 Lurie Group at +1 (646) 824-2.86 thousand. And we will have 1 sent to you. Alternatively, you may obtain a copy of the release on the investor information section on the company's corporate website.

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. Some of the financial measures referred to during this call and in the earnings release may include non GAAP measures. Sify's results for the year and the quarter are according to the International Financial Reporting Standards or IFRS and will differ somewhat from the GAAP announcements made in previous years. A 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 are presented.

That is presented in accordance with GAAP will be made available on Sify's website. Before we continue, 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, are subject to risks and uncertainties that could cause actual results to differ materially from those described. With respect to such forward-looking statements, the company seeks protection afforded by the Private Securities Litigation Reform Act of 2000. These risks include a variety of factors, including competitive developments and risk factors listed from time to time in the company's SEC reports and public documents.

Those lists are intended to identify certain principal factors that would 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. Allow me to turn this over to Raju Vegesna, chairman of Sify Technologies. Chairman?

Ananta Koti Raju Vegesna: Thank you, Praveen. Good morning, everyone. And thank you for joining on the call. India's digital transformation is entering into a new phase of education at scale. What was once digital transformation agenda is now becoming a business imperative. With organizations investing in technology to improve productivity, resilience, and the customer experience. India continues to benefit from unique combination of progressive policy initiatives, expanding digital infrastructure, and a deep pool of technology talent. As AI, adoption gathers pace, and 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 and innovation hub.

At SIFI, 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 modernize their technology environment. And prepare for an AI-enabled future. India is no longer preparing for a digital future. It is actually actively shaping it. SIFI remains committed to building the infrastructure and capabilities that will help power this next chapter of India's growth. Let me now bring in our executive director and group CFO, M.P. Vijay Kumar, to explain both the business and financial highlights. Vijay Kumar?

Muthu Raju Paravasa Raju Vijay Kumar: Thank you, chairman. We continue to strengthen our business through sustained investments in infrastructure, technology platforms, and people. Aligned with the evolving needs of our customers, and the long-term opportunities in India's digital economy. Our investment priorities remain focused on expanding our data center capacity modernizing our network infrastructure, for AI workloads, enhancing our cloud interconnect capabilities, and strengthening the tools and platforms that support operational efficiency. And customer delivery. Equally, we continue to invest in developing our people building the skills and capabilities required to support emerging technologies and deliver consistent outcomes across our businesses. These investments are being pursued alongside a continued emphasis on cost competitiveness, resource optimization, and cash flow management.

While capacity expansion and capacity building have implications, for depreciation, interest, and manpower cost. We remain focused on ensuring that capital allocation is supported by sound financial planning, prudent management, and long-term business objectives. Our priority is to maintain a strong balance sheet, and adequate financial flexibility. While investing for sustainable growth and creating enduring value for our shareholders. Let me now expand on the business highlights for the quarter. The revenue split between the businesses for the quarter was network services 43%, data center services, 37%, and digital services 20%. As of September 30, 2026, data center operational capacity stood at 136 megawatt. And we have a contracted capacity of 113 megawatts scheduled for delivery.

As of September 30, 2026, Sify provides services via 1.26 thousand fiber nodes across the country. A 6% increase over the same quarter last year. A detailed list of our wins is recorded in our press release now live on our website. Let me briefly sum up the financial performance for Q2 of FY 2026-2027. Revenue was INR 1.3 million an increase of 31%. Over the same quarter last year. Adjusted EBITDA was INR 3.13 thousand million an increase of 33% over the same quarter last year. Profit for the quarter was INR 14 million Capital expenditure during the quarter was INR 8.57 thousand million. Cash balance at the end of the quarter was INR 5.17 thousand million.

I will now hand over to our chairman for his closing remarks.

Ananta Koti Raju Vegesna: Thank you, Vijay Kumar. SIFI is well positioned to support India's digital transformation. And the opportunities emerging from an increasingly connected and AI-driven future. As India's digital transformation is advances, we remain committed to enabling this journey through our technology capabilities infrastructure, and services while creating long-term value for all our stakeholders. I thank you, all our stakeholders, for their continued trust and confidence as we work towards this future. Thank you for joining us on the call. I now hand over to the operator for the questions. Operator?

Operator: Certainly. Everyone at this time will be conducting a question-and-answer session. If you have any questions or comments, please press 1 on your phone at this time. We do ask that while posing your question, please pick up your handset if you are listening on a speakerphone to provide optimum sound quality. And once again, if you have any questions or comments, please press 1 on your phone. Please hold while we poll for questions. Thank you. Our first question comes from Greg Burns from Sidoti. Your line is live.

Greg Burns: Good morning. I was just hoping to get an update on the status of the Sify Infinit Spaces IPO. Maybe the potential timing for that?

Muthu Raju Paravasa Raju Vijay Kumar: Yeah. The bankers are advising us on the right time to do the IPO. We continue to be engaged with the bankers. And we will communicate once the dates are finalized.

Greg Burns: Okay. Is it a market related issue causing the delay? Like, what is the-- what are what are you looking to see in the market to complete the transaction?

Muthu Raju Paravasa Raju Vijay Kumar: Yeah. It is not strictly market related. The market in India is pretty good. You just saw the country's largest IPO happening very successfully. So the bankers would like to time the issue at the appropriate time. And, also, there are we are adequately capitalized for the time being as well.

Greg Burns: Okay. And that, I guess, was my next question. Like, the does this, in any way, constrict your ability to grow? Do you have a you know, adequate access to capital to continue your growth plans at the current trajectory?

Muthu Raju Paravasa Raju Vijay Kumar: Yes. Yes. Okay.

Greg Burns: The operational capacity, that is a 136 megawatts, that is your revenue generating capacity? Is that right. What that number is?

Muthu Raju Paravasa Raju Vijay Kumar: Okay.

Greg Burns: What is the total design capacity of your current footprint just so we know how much that can expand And the 113 that is in backlog, the 113 megawatts, what is the timeline of bringing that online?

Muthu Raju Paravasa Raju Vijay Kumar: Yeah. We will be delivering this beginning this quarter over the next 3 quarters. And the total design capacity after including the backlog to be delivered. We would be close to about 300 megawatts. Okay.

Greg Burns: Okay. And as you look at the competitive landscape, within the market. Obviously, there is a lot of investment going on in the data center space in India. How is pricing when we think about you know, the ROI you are looking to get on these investments? Like, are you seeing any changes in pricing, your ability to rent out space, or, you know, any factors that might impact you know, the return on investment you are getting on this spending?

Muthu Raju Paravasa Raju Vijay Kumar: Yeah. At this point in time, as far as Sify is concerned, to my knowledge, as far as the peers are concerned as well. The industry demand is in far excess of the supply which is available. And the given this scenario, there is no pressure on pricing. In fact, the pricing is getting better, and the returns are also improving. Okay, Greg. All right.

Ananta Koti Raju Vegesna: Thank you very much.

Muthu Raju Paravasa Raju Vijay Kumar: Thank you.

Operator: Thank you. Your next question is coming from Prateek Singh from IIFL Capital. Your line is live.

Prateek Singh: Hi. Thanks for the opportunity. So just to get some clarity on this 3 megawatt number, So earlier when we said that 81 megawatts was deliverable in FY 2027, That is still on track, and that is part of this 3. Is that the current understanding?

Muthu Raju Paravasa Raju Vijay Kumar: You are right, Praveen. Okay.

Prateek Singh: And what is the current already commissioned build capacity? It used to be 88, I think, for 2 or 3 quarters.

Muthu Raju Paravasa Raju Vijay Kumar: Yeah. So that is increasing to about 300 megawatts. that is what is under construction now. So this 136 plus 113, which is 249 megawatts, will become revenue generating over the next few quarters.

Prateek Singh: Understood. Understood. And regarding the IPO delays, is there any regulation as to what needs to do an IPO within so much time of the NHP filing in India? Or there is no such strict timelines as such, after which we have to, you know, restart the process?

Muthu Raju Paravasa Raju Vijay Kumar: There is a timeline available, which is up to the end of January. And beyond that, it is a restart process.

Prateek Singh: Okay. And, sir, as you used to mention in your last calls, in the hypothetical scenario of IPO getting delayed further, you will be supported by that understanding still. Correct?

Muthu Raju Paravasa Raju Vijay Kumar: Correct.

Prateek Singh: Understood. Understood. My next line of function is around the digital services with less I think after a long time, we saw this business turn a bit positive. Do you think this is something which can sustain or are there any 1-off elements in this quarter?

Muthu Raju Paravasa Raju Vijay Kumar: It should get better from here. Lot of work has gone in and continues to happen here. The idea is for us to make a digital service entity a portfolio of services largely AI led ones, And as you know, this technology is scaling well. So, hopefully, this should be a sustainable performance going forward.

Prateek Singh: Understood. Understood. And my last question is based on your current footprint and land bank, what is the maximum design capacity with the ballpark range you can reach without the need for further acquiring any land? Does it cap out at 300 megawatts, or can we go higher.

Muthu Raju Paravasa Raju Vijay Kumar: No, no, no, no. That we have. Yep. We should be able to do more than 1 gigawatt with the land bank which we have-- land bank which we have. across 7 cities.

Prateek Singh: Okay. Any update on the edge data centers which we alluded to in the last few calls, or is it still too early for that?

Muthu Raju Paravasa Raju Vijay Kumar: No. 2 edge data centers have gone live, which is in Lucknow and, Mohali. So that is Chandigarh. There are other 2 edge data centers where, work is happening as we speak.

Prateek Singh: Thanks. And my last question is on the Andhra Pradesh data center. Is there any progress there? Or that is something that we will focus on after our current set of projects on current land parcels?

Muthu Raju Paravasa Raju Vijay Kumar: You are right. We will first deliver on our existing commitments. Concurrently, we are working on the engineering part for the Visakhapatnam site. And, we will take it up at the appropriate time. Thanks. Thanks for answering the questions. All the best.

Ananta Koti Raju Vegesna: Thanks, Prateek.

Operator: Thank you. Your next question is coming from Sourabh Arya from Oak Lane. Your line is live.

Sourabh Arya: Yeah. Hi, sir. Am I audible?

Muthu Raju Paravasa Raju Vijay Kumar: Yes. You are audible.

Sourabh Arya: Yeah. Hi. You are audible, sir. Question.

Muthu Raju Paravasa Raju Vijay Kumar: Yeah. Yes, sir.

Sourabh Arya: First question is why QoQ, there is a decline in data center revenue? I think we added 5-megawatt last quarter. Right?

Muthu Raju Paravasa Raju Vijay Kumar: Yeah. So last quarter, when you added the 5-megawatt, it was largely for the enterprise customers. And when you do it, there is an installation revenue which you actually get. Consequently to which there was a increase. And there is also a power revenue which scaled up in that particular from the existing customers.

Sourabh Arya: But how does it explain the decline? I mean to say?

Muthu Raju Paravasa Raju Vijay Kumar: No. No. I was talking about why the previous was higher. To put it the other way around, the current quarter, we did not have any implementation revenue. Unlike the previous quarter. And the power consumption revenue was little lower than the last quarter. Power revenue, as you know, is a pass through. It does not impact the net generation. Am I clear, Sourabh, that.

Operator: Thank you. Your next question is coming from Greg Burns from Sidoti. Your line is live.

Greg Burns: Hi. So I guess just to follow-up on that last question. So it is more of just a timing issue with the, you know, how the backlog getting deployed as opposed to maybe a change in the trajectory of the data center business. Correct?

Muthu Raju Paravasa Raju Vijay Kumar: Yeah. The backlog orders will get delivered beginning this quarter. Over the next 3 quarters, it will get delivered.

Greg Burns: Okay. Greg. And then I had a last question about the network services growth this quarter. It was it was a lot higher than we expected and, you know, more than we have seen in recent quarters. Was there anything specifically driving that? And is that a good level to build off of? For our models?

Muthu Raju Paravasa Raju Vijay Kumar: Yes. Yes. As far as the network is concerned, you would recall that we started building our national long-distance fiber network on our own. And given the hyperscale data center growth happening in the country and the data center interconnect services as well. So this business is seeing upside. And we will continue to stay focused on that business growth as well.

Greg Burns: Alright. Thank you.

Muthu Raju Paravasa Raju Vijay Kumar: Thank you.

Operator: Thank you. Your next question is coming from Sourabh Arya from Oak Lane. Your line is live.

Sourabh Arya: Hello? Actually, I got dropped.

Muthu Raju Paravasa Raju Vijay Kumar: Yeah. Hi, Sourabh. So you were on and you dropped. I just. I was asking you whether I explained to you satisfactorily. Got it?

Sourabh Arya: No. Actually, I got dropped from the call.

Muthu Raju Paravasa Raju Vijay Kumar: Okay. I will repeat, Sourabh. Unlike quarter 1, this quarter, we did not have any enterprise implementation services income, which typically is a 1-time income. that is 1 reason. The second is in the previous quarter, there was a higher power consumption from the existing customers. And the power revenue was higher. This quarter, it was relatively moderated, and hence, the power revenue, which is a pass-through,. Was lower. Those are the 2 reasons why between the 2 quarters, there is a revenue change.

Sourabh Arya: Okay. But capacity was more in this quarter than last quarter. Correct. And then how should we think about then, you know, these capacities fanning out in the next 2 quarters? Because you said that most of the additions will happen in the second half.

Muthu Raju Paravasa Raju Vijay Kumar: Yeah. In fact, we have communicated that there is 113 megawatts of contracts which is capacity, which is scheduled for delivery. And it will get delivered beginning this quarter over the next 3 quarters.

Sourabh Arya: Okay. Perfect. And since now network business has grown very strongly, while the Yeah. Margin declined. So is it-- how should 1 read this business in that case? In past, we have guided it to grow. Yeah.

Muthu Raju Paravasa Raju Vijay Kumar: So network business should continue to see some bit of growth. Corresponding to the data center growth as well, because as the hyperscale data centers grow in India, the network connectivity between the data centers and for enterprises to connect to those data centers. That business will also see growth. And as I mentioned during my address, the network expansion which is happening is largely now for enabling AI workloads to be carried. Across the length and breadth of the country. And that is 1 of the reasons why we are seeing growth.

Sourabh Arya: So when India's capacity moves from 1.5 gigawatts to 10 gigawatts, that is what everybody is saying for next 5 years. Correct. Does it mean network business can grow in that line?

Muthu Raju Paravasa Raju Vijay Kumar: Yes. Because. Can it become 4-5x? Data. I am not too sure about 4-5x. Volume wise, probably, yes. But not revenue wise because the unit economics of that business is different.

Sourabh Arya: Okay. So there is a pricing pressure always in the.

Muthu Raju Paravasa Raju Vijay Kumar: Pricing pressure. it is inherent for that, nature of business because as you scale the unit economics, the costs are significantly lower.

Sourabh Arya: But can you put some context here if even if industry is going from 1.5 to 10 gigawatts? What does it mean for network opportunity? In terms of revenue? Multiple yeah.

Muthu Raju Paravasa Raju Vijay Kumar: There are multiple legs of a network. 1 is the subsea cables which come here because most of the data center capacities serving the global workloads which are there. So there will be a subsea revenue. We do not participate in the subsea revenue. And then connectivity between the data centers in India. So that business will see some growth for sure.

Sourabh Arya: Okay. So I think the. Then maybe the better question would be, among your 3 businesses, so is it fair to say data center will grow highest and then network and then digital? Or do you expect in some other Yeah.

Muthu Raju Paravasa Raju Vijay Kumar: I do not want to make forward looking but if you look at the trend over the last few years and the way we have deployed capital, that is a reasonable conclusion you can arrive at. But there are businesses like the digital services, which has a potential to scale bigger. But let's wait and see as to when that will start delivering.

Sourabh Arya: Okay. Perfect, sir. Thank you. Thank you very much. Thank you, sir. All the best.

Muthu Raju Paravasa Raju Vijay Kumar: Thank you.

Ananta Koti Raju Vegesna: Thank you.

Operator: Thank you. Your next question is coming from Prateek Singh from IIFL Capital. Your line is live.

Prateek Singh: Hi. Thanks for the opportunity again. 3 questions. First, what is the update on the Vizag cable landing station? Has work started there, or it is something which will be time?

Muthu Raju Paravasa Raju Vijay Kumar: Okay. So the Vizag cable landing station, we have got the DOT approval now. And we will start work on the same.

Prateek Singh: Okay. And just to understand a bit more about the network services business, it is something where there would be multiple peers and competitors as well. Right? Who can Yeah, take part in the growing demand. Yeah. Yeah. Yeah.

Muthu Raju Paravasa Raju Vijay Kumar: There are good peers. There are some 4 or 5 good peers who are there.

Prateek Singh: And the peers. Understood. Understood. And on the CapEx front, possible to quantify on the CapEx front. CapEx front on the first half spend or maybe this quarter spend how much is going into network, and how much is going into digital?

Muthu Raju Paravasa Raju Vijay Kumar: No. At this point of time, the amount of CapEx is on the data center. And then on the network side. Probably, we are about a 80-20 ratio.

Prateek Singh: So how does it work? I mean, to meet more network demand, is it like we are sitting on capacity and we do not need to do CapEx for that? Sorry if I did not understand the business really well on my network side. How does it work?

Muthu Raju Paravasa Raju Vijay Kumar: Yeah. On network side, we have a model of asset light delivery of services. And having said that, we will increase our spend on the network side over time. We are. We are currently focused on delivering our data center capacity, but we will continue to invest on network too. And you will see spend happening on that in due course.

Prateek Singh: Thanks. And my last question is, this 3 megawatts is entirely-- and if yes, which part of the country? It is in Mumbai.

Muthu Raju Paravasa Raju Vijay Kumar: And in Noida, the small capacity in Chennai as well. Sure. Okay. Thank you, Prateek.

Operator: Thank you. And once again, everyone, if you have any questions or comments, please press *1 on your phone. Please hold while we poll for questions. Thank you. That concludes our Q&A session. I will now hand the conference back to Raju Vegesna for closing remarks. Please go ahead.

Ananta Koti Raju Vegesna: Thank you. Thank you for your time on this call. Have a great day.

Operator: Thank you. Thank you. Everyone, this concludes today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.

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