Sify (SIFY) Q4 2026 Earnings Call Transcript

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DATE

Monday, April 13, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

• Chairman — Raju Vegesna
• Executive Director and Group CFO — M. P. Vijay Kumar
• Vice President, Investor Relations — Praveen Krishna

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TAKEAWAYS

• Revenue -- INR 4,487 million, representing a 13% increase.
• EBITDA -- INR 9,871 million, an increase of 31%.
• Loss Before Tax -- INR 941 million.
• Loss After Tax -- INR 1,366 million.
• Cash Balance -- INR 5,071 million at fiscal year-end.
• Capital Expenditure -- INR 13,282 million for the year, with management guiding for significantly higher CapEx in the upcoming fiscal year due to planned capacity expansion.
• Revenue by Segment -- Network Services: 39%, Data Center Services: 3%, Digital Services: 22%
• Segment Revenue Growth -- Network Services up 12%, Data Center Services up 23%, Digital Services down 2%.
• Segment Results Growth -- Network Services results up 91%, Data Center Colocation results up 24%, Digital Services results down 67%.
• Data Center Capacity -- 188 megawatts total design capacity, with 129 megawatts revenue-generating as of March 26.
• Data Center Backlog -- 81 megawatts contracted for future delivery, scheduled to be delivered in phases within the current fiscal year.
• Installed Data Center Capacity -- 140 megawatts as of March 26 (previously 127 megawatts as of prior year).
• Data Center Operational Capacity -- 129 megawatts as of March 26 (previously 111 megawatts as of prior year).
• Network Services Coverage -- 1,224 fiber nodes deployed, an 8% increase.
• SDWAN Service Points -- 10,340 active across India.
• Planned Expansion -- Management to nearly double revenue-generating data center capacity over the next year.
• IPO Details for Sify Infinite Space -- INR 2,500 crores primary, INR 1,200 crores offer for sale, INR 3,700 crores total size; all regulatory approvals received, timing to be determined with bankers.
• Government Incentive -- Chairman Raju Vegesna noted a newly introduced 20-year tax holiday for foreign cloud service providers using Indian data centers for global services.
• Data Center Development -- Ongoing construction of two major expansions at Rabale: one at 77 megawatts and another at 52 megawatts, both designed with potential for additional scaling.
• Margin Guidance -- Management targets breakeven in the data center services segment within two years, with “quarterly improvement going forward.”
• CapEx Drivers -- Anticipated CapEx increase attributed to nearly doubling of revenue-generating data center capacity.
• Demand Shifts -- M. P. Vijay Kumar stated, “We are seeing that happen for our data center collection business and consequently, to our network business as well,” regarding increased demand from Middle East client interactions.
• Segment Growth Outlook -- Network Services growing at low double-digit rates; Digital Services continues investment in AI infrastructure.
• Data Center EBITDA Potential -- Management indicates liquid cooling may lead to higher EBITDA per megawatt, but specifics depend on contract structures.
• No Significant Rollout Bottlenecks -- Management states current construction faces no material supply chain or energy availability issues, citing strong government support.

SUMMARY

Management communicated targeted expansion with nearly doubled revenue-generating data center capacity planned within the fiscal year, driving an expected material increase in capital expenditures. The company confirmed all regulatory approvals for the Sify Infinite Space IPO, totaling INR 3,700 crores, with launch timing pending banker guidance. Representatives highlighted continued government support, including a new 20-year tax holiday for qualifying foreign cloud customers. Operational progress shows both installed and operational data center capacity rising, with additional megawatts under firm contract scheduled for phased delivery. The company indicated active engagement with Middle Eastern clients, which may be driving incremental demand for data center and network services in India.

• Management is not providing specific EBITDA per megawatt guidance for modular liquid cooling deployments but noted higher capital intensity may improve returns for these sites.
• Cash discipline and a focus on “cost competitiveness, cash flow optimization and fiscal discipline” are being emphasized as expansion intensifies.
• Company expects ongoing quarterly margin improvement in data center services, aiming for breakeven within two years according to segment leadership.
• The upcoming IPO includes a primary capital raise and a partial exit for Kotak, the growth capital partner, with specifics publicly disclosed in the DRHP.

INDUSTRY GLOSSARY

• SDWAN: Software-Defined Wide Area Network — a virtualized network architecture that enables centralized, efficient, and secure management of wide-area networking.
• DRHP: Draft Red Herring Prospectus — a preliminary registration document for an IPO in Indian capital markets, detailing offer structure and disclosure requirements.
• Colocation: A data center service where enterprises rent space, power, and cooling to house their servers and hardware alongside other clients in a facility managed by the provider.

Full Conference Call Transcript

Praveen Krishna: Thank you, Ali. 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 Vkena; and my Executive Director and Group CFO, Mr. M.P. Vijay Kumar. Following our comments on the release, there will be an opportunity for questions. If you do not have a copy of our press release, please call Luri Group, our IR agency at (606)-824-2856, and we'll have one sent to you. Alternatively, you may obtain a copy of the release at the Investor Information section on the company's corporate website at sifytechnologies.com/investors.

A replay of today's call may be accessed by dialing 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 measures referred to during this call and in the earnings release may include non-GAAP measures. The fee results for the year are according to the International Financial Reporting Standards, or IFRS, and will differ some more from the GAAP announcements made in previous years.

A presentation of the most directly comparable financial measures calculated and pestered 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 will be made available on CP'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 and are subject to risks and uncertainties that could cause actual results to differ materially from those displays. 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. Those lists are entered in 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 in run to the company. I would now like to introduce Mr. Raju Vegesna, my Chairman.

Raju Vegesna: Thank you, Praveen. Good morning, everyone. Thank you for joining us on the call. India's digital journey continues to accelerate with renewed clarity and purpose. The convergence of resilient infrastructure, progressive policy framework and an increasingly innovation-driven enterprise ecosystem is positioning India as a corner store of the global digital space. Enterprises today are moving beyond adoption to technology optimization. This evolution is not only strengthening the businesses but also enabling inclusive growth, expanding opportunities across sectors and communities. The recent union budget has recommended a tax holiday for foreign cloud players who utilize Indian data centers to secure -- to serve global customers.

This is expected to add to the tailwinds for a domestic data center growth with sustained investment in digital infrastructure and such a strong regulatory vision, India is reinforcing its credentials as a technology hub. In this environment, Sify is uniquely positioned to partner with the enterprises in their next phase of transformation, delivering integrated solutions that power growth and resilience. I remain confident that our strategic direction and combined with India's enduring strength will enable us to play a pivotal role in shaping a future-ready digital ecosystem. Let me now bring in our Executive Director and Group CFO; Mr. M.P. Vijay Kumar, to explain both the business and financial highlights for the year. Vijay Kumar.

M. Vijay Kumar: Thank you, Chairman. Our businesses continued to deliver focused growth with each unit capitalizing on its distinct market opportunities. attracting strategic investments and building meaningful partnerships. Our investment philosophy remains consistent and forward-looking, expanding our data center footprint into new and emerging locations for long-term growth, augmenting capacity at existing facilities to address immediate demand and further strengthening our network and cloud interconnect ecosystem. . In parallel and more importantly, we continue to invest in our people, equipping them with the right skills, tools and processes to drive innovation, efficiency and customer success.

All these initiatives are being executed with focus on cost competitiveness, cash flow optimization and fiscal discipline, ensuring that we maintain a strong financial foundation, which supports our growth ambitions. In accordance with the amendment agreement to the debenture subscription agreement with Kotak, the additional coupon payable on compulsory convertible debenture pursuant to the conversion of equity in February 2026 is recognized as expense in the statement of income. We have received the final observations from SEBI on our draft retiring prospectus for a data center subsidiary, Sify Infinite Space is limited, and we will time the issue and listing to a conducive market environment based on banker's guidance.

The cash balance as at end of the year was INR 5,071 million. Let me now expand on the business highlights for the year. The revenue split between the businesses for the year was Network Services 39%; Data Center Services, 3%, Digital Services 22%. Segment revenue for the year increased 12% in Network Services, 23% in Data Center Services and decreased marginally 2% in Digital Services. Segment results for the year have increased by 91% in Network Services 24% in Data Center Colocation services and decreased 67% for Digital Services. The data center subsidiaries sold megawatts of data center capacity in the year, cumulatively sold capacity stands at 129 megawatts.

And during the quarter, the data center business has contracted an additional 81 megawatts to be delivered in the coming quarters this financial year 2026, '27. As of March 26, Sify provides network services via 1,224 fiber notes, an 8% increase over the same quarter last year. As March 31, '26, Sify 10,340 SD van service points across the country. 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 the year. Revenue was INR 4,487 million, an increase of 13% over last year. EBITDA was INR 9,871 million, an increase of 31% over last year.

Loss before tax was INR 941 million and loss after tax was INR 1366 million. Capital expenditure during the year was INR 13,282 million. I will now hand over to our Chairman for his closing remarks. Chairman

Raju Vegesna: Thank you, Vijay Kumar. Our businesses are mutually reinforcing pillars that together create a resilient end-to-end digital ecosystem. Strong connectivity enables scalable data infrastructure while our data centers power secure, high-performance platforms for advanced digital solutions, in turn, our digital services unlock value for enterprises and consumers driving demand across the entire stack. As India accelerates its digital transformation, this integrated approach positions us as a trusted partner at scale. It will also enhance our global credibility, building lasting image equity while strengthening our brand among investors, partners and stakeholders alike. Thank you for joining us on this call. I will now hand over to the operator for questions.

Operator: Thank you, sir. Ladies and gentlemen, at this time, we will be conducting our question-and-answer session. [Operator Instructions] Our first question is coming from Greg Burns with Sidoti & Company.

Gregory Burns: Could you just give us the numbers around what the existing design capacity for your data center businesses and how much operational capacity has been sold?

M. Vijay Kumar: The total design capacity of the 14 facilities which are live is 188-megawatt out of which 129-megawatt of capacity is revenue generating at present .

Raju Vegesna: At the end of March...

M. Vijay Kumar: As of March 26.

Gregory Burns: Okay. And then the 81 megawatts that you mentioned, that is contracted and in your backlog? .

M. Vijay Kumar: Yes, that is the backlog. That is for new facilities, which are currently under construction, which will go live in the early part of the second quarter, and will be delivered in a phased manner to the customer.

Gregory Burns: Okay. Perfect. And then in terms of CapEx, I guess it was -- I guess, $13 million this year, what is the guidance or what is your outlook for this year, about a similar level of CapEx? Or will it be increasing again this year?

M. Vijay Kumar: Yes, the CapEx will be higher for this year. given that we are almost doubling our capacity, it will be significantly higher.

Gregory Burns: Okay. And are you seeing any bottlenecks in terms of either energy availability or inputs like memory that might impact the pace of your rollout?

M. Vijay Kumar: At present, we aren't seeing anything here. There's very good support from the union government as well as the state governments for the data center infrastructure creation in India. And in fact, as the Chairman mentioned in his remarks, the government has also gone forward with committing a 20-year tax holiday for foreign cloud service providers who host their capacity in India for serving the global market. And there are a good number of customers who are in active conversation in this to avail this benefit. .

Operator: [Operator Instructions] Our next question is coming from Prateek Singh with IIFL Capital.

Prateek Singh: Just taking it ahead from Greg's question, I know that we kind of in the DRHP, we have given numbers on build capacity installed and operational which was 188, 127 and 111 as of FY '25 end. And -- so I understand that 188, is still INR 188. Can you just give us a sense as to how the other 2 numbers have changed, which are installed and operational

M. Vijay Kumar: Yes, the 127 meg, which is installed is at 140 and 111 is at 129 million. .

Prateek Singh: Understood. And when we say that 81-megawatt is backlog, when you said early part of second quarter, by second quarter here, we mean the second financial year quarter, right?

M. Vijay Kumar: Correct.

Prateek Singh: So does it mean...

M. Vijay Kumar: And will be delivered in a phased manner.

Gregory Burns: Okay. Yes. So typically, that takes 15 to 18 months for the entire 81 megawatts on generating .

M. Vijay Kumar: No. The current customer schedule is to deliver it within this financial year. .

Prateek Singh: Understood. And another question is, sir, when you talked about almost doubling of capacity this year, we are talking about doubling of the design capacity, which is 188 going to almost 370, 380.

M. Vijay Kumar: No, I'm talking about doubling of the revenue-generating capacity.

Raju Vegesna: And also, we will build the design capacity also beyond that -- beyond 188.

Prateek Singh: And just 1 last question. So given that there is so much happening, i.e., we study assembly good site also last month, and I noticed that we are also providing the opportunity of liquid cooling. So if I had to get a sense as to what kind of EBITDA per megawatt, how liquid cooling would versus the current scenario at least 1 can assume on the base basis that our EBITDA per megawatt would largely at least be what we are doing right now without liquid cooling? Or do we think that liquid cooling the EBITDA per megawatt might be a bit lower than what we are doing right now? .

M. Vijay Kumar: It could be a little higher, but I think there are too much of specifics. Maybe we can have a conversation separately because customer contracts have some unique elements the way they are constructed. But typically considering higher capital deployment, you tend to get a higher return. .

Operator: Our next question is coming from [indiscernible] the who is an investor.

Unknown Attendee: This is Srikanth here. I almost joined all of your earnings call. I have SP1 I couldn't follow the earlier conversation because I joined late. However, my questions are more specific to the India listing. One, given that it looks like you have all the approvals now, is there any deferment in the IPO because of this whole geopolitical situation across the globe. Two, is -- has the IPO size being decided, and there have been speculations somebody is quoting one number, somebody else is quoting another number? Those two would be my specific questions.

M. Vijay Kumar: Okay. So let me take the latter one. The size is already communicated as part of the DRXP. It is INR 2,500 crores of primary and INR 1,200 crores of offer for sale, a partial exit from the existing growth capital partner, Kotak. So total INR 3,700, that is already part of the DRHP filed and approved. Second, as far as the deferment is concerned, there is no deferment per se, except that we are waiting for the guidance to the bankers on the timing of the actual issuance and listing. As management, we have done our road shows, approvals are all in place. So we'll get guided with the bankers for the next steps. .

Unknown Attendee: And are those numbers, what does it translate to the enterprise value of Sify Infinity space? .

M. Vijay Kumar: That would be a little difficult to comment here. I think it depends on how the building process goes. And once that is done, as part of the updated DRHP would be visible.

Operator: We have another question from Prateek Singh with IIFL Capital.

Prateek Singh: Sir, in the last call, if I remember correctly, we had said that we are working on 2 expansions, which were 77 megawatts and 52 megawatts, if I'm not wrong. Can you just guide us as to which are the locations where these 2 expansions are coming in? Are they both in Rabale or in Nord or other places? And we also mentioned that the 77 earlier was 52% and because of higher density, it was taken up to 77%. So is there any opportunity to take this 52 that we're talking about right now to 77 or 80 also? .

M. Vijay Kumar: Both of them are at Rabale, Prateek and the facility which have visited, you would have seen the construction right adjacent to the place where you had all the meetings and the facility visit. So that is the 77-megawatt one, which we'll be delivering to the customer now. And write-opposite, you would have seen the other 2 towers, which are the 52-megawatt and based on the customer engagement, it could -- the final usage of that could be higher than 52-megawatt. But at this point in time, it's been designed for that, but it has the capacity to scale up for a higher capacity. Both of them are in Rabale part of the campus. .

Unknown Attendee: And this I would mission or will be...

M. Vijay Kumar: Yes. 52-megawatt part of it will get commissioned this financial year and other part, the first quarter of next financial year. .

Prateek Singh: Sir, you're saying something.

M. Vijay Kumar: Pratik, I would invite you once again to our campus, so that you can have a good sense of the progress which has happened in those 2 facilities, which are getting ready for delivery. .

Operator: Our next question is coming from Sourabh Arya with Oakland Capital.

Sourabh Arya: Sir, am I audible?

M. Vijay Kumar: Yes, it's good, yes.

Raju Vegesna: Can you give some color for all 3 businesses going into next year? Like obviously, you were expecting the last quarter improvement in data services and even improvement in network business. So how should we think about all 3 businesses from a revenue growth and margin perspective?

M. Vijay Kumar: Yes. Typically, it's forward-looking statements, Sagan we refrain from that. But I can just give you a 30,000 feet view. Our data center business growth numbers have already communicated as part of our communication as against 12-megawatt of revenue-generating capacity. We have contracted for delivery this year. already 81-megawatt of capacity is there. And as far as the network services business is concerned, it's organically growing at double-digit numbers, of course, low double-digit numbers. And that growth should happen along with the digital infrastructure consumption, which we are witnessing in the country. On the IT services business, we continue to stay focused on investing in people to build capabilities for the AI kind of infrastructure services.

So a lot of work is happening over the last 18 to 24 months. And as and when the consumption picks up in the domestic market, will be ready for delivering those services. So that investment will continue to be there for some time, given the fact that we are confident about its long-term prospects. .

Raju Vegesna: And on the margin side, if you could give like you were expecting breakeven of data services business. So how should we...

M. Vijay Kumar: Yes. Yes, I'll not be able to give a specific quarter. There is work happening to get to breakeven. But I'll not be able to give a specific quarter when we will achieve that. .

Sourabh Arya: Sure. But let's over 2 years, do you expect it to turn around or to say how should we so look at the progress of this business then. Would it be quarterly...

M. Vijay Kumar: Yes, you should see quarterly improvement going forward. But I think 2 years is a very reasonable period to see that we get to breakeven. It's a very reasonable period. .

Sourabh Arya: Okay. And whatever is happening in Middle East. So do you think some of the demand will shift to India? And have you started seeing it in interaction with clients there in...

M. Vijay Kumar: Yes. We are seeing that happen for our data center collection business and consequently, to our network business as well. .

Operator: As we have no further questions on the line at this time, I would like to turn the call back over to management for any closing remarks.

Raju Vegesna: Thank you for everyone and your time on the call. Have a good day. .

Operator: Thank you, ladies and gentlemen. This does conclude today's conference, and you may disconnect your lines at this time, and we thank you for your participation.

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