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Sify Technologies Q2 2027 Earnings Call Transcript
Sify Technologies (NASDAQ:SIFY) reported second-quarter financial results on Wednesday. The transcript from the company’s second-quarter earnings call has been provided below.
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View the webcast at https://www.webcaster4.com/Webcast/Page/2184/54697
Summary
Sify Technologies Ltd reported a 31% year-over-year increase in revenue for Q2 FY 2026-27, totaling INR 13,798 million, and a 33% rise in adjusted EBITDA to INR 3,131 million.
The company is focusing on expanding data center capacity, modernizing network infrastructure for AI workloads, and enhancing cloud interconnect capabilities to align with India’s digital transformation.
Sify’s data center operational capacity is at 136 megawatts, with an additional 113 megawatts contracted for delivery, indicating significant future growth potential.
The network services segment saw strong growth, driven by the expansion of the national long-distance fiber network and increased demand for data center interconnect services.
Digital services turned EBITDA positive, with management optimistic about future sustainability, largely driven by AI-led services.
The company remains strategically committed to supporting India’s digital economy while maintaining a strong balance sheet and financial flexibility.
The potential IPO for Sify Infinite Spaces is delayed, but not due to market conditions; the company has adequate capital to continue its growth plans.
Pricing and returns in the data center space are favorable due to high demand outstripping supply, with no immediate pressure on pricing.
Full Transcript
OPERATOR
Good day everyone and welcome to the Sify Technologies financial results for second quarter fiscal year 2026 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 Ltd. I’m joined on the call today by Rajiv Eksenha, 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 Lori Group at 1-646-824-2856 and we will 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. 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 that is presented in accordance with GAAP will be made available on Sify’s website.
Before we continue, I’d 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 actually cause 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 1995. 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 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. Allow me to turn this over to Mr. Raju Vegesna, Chairman of Sify Technologies.
Raju Vegesna (Chairman & Managing Director)
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 adoption at scale. What was once a 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 a unique combination of progressive policy initiatives, expanding digital infrastructure and a deep pool of technology talent.
As AI adoption gathers pace, the need of 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 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 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. Sify remains committed to building the infrastructure and capabilities that will help power this next chapter of India’s growth.
Let me now bring our Executive Director and Group CFO, Mr. M P Vijay Kumar, to explain both the business and financial highlights.
M P Vijay Kumar (Executive Director and Group CFO)
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 risk 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 1,264 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 2026-27. Revenue was INR 13,798 million, an increase of 31% over the same quarter last year. Adjusted EBITDA was INR 3,131 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 8,573 million. Cash balance at the end of the quarter was INR 5,868 million. I will now hand over to our Chairman for his closing remarks.
Raju Vegesna (Chairman & Managing Director)
Thank you, Vijay Kumar. Sify 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 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.
OPERATOR
Certainly everyone at this time we will be conducting a question and answer session. If you have any questions or comments, please press star one on your phone at this time. We do ask that while posing your question, please pick up your handset if you’re listening on speakerphone to provide optimum sound quality. And once again, if you have any questions or comments, please press star one 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 (Analyst)
Good morning. I was hoping to get an update on the status of the Sify Infinite Spaces IPO. Maybe the potential timing for that.
Raju Vegesna (Chairman & Managing Director)
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 (Analyst)
Okay. Is it a market-related issue causing the delay? Like what, what is, what is the… What are you looking to see in the market to complete the transaction?
Raju Vegesna (Chairman & Managing Director)
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 we are adequately capitalized for the time being as well.
Greg Burns (Analyst)
Okay. And that I guess was my next question. Does this in any way constrict your ability to grow? Do you have adequate access to capital to continue your growth plans at the current trajectory?
Raju Vegesna (Chairman & Managing Director)
Yeah. Yes.
Greg Burns (Analyst)
Okay. Okay. The operational capacity, that 136 megawatts, that is your revenue-generating capacity, is that…
Raju Vegesna (Chairman & Managing Director)
You are right.
Greg Burns (Analyst)
What that number…
Raju Vegesna (Chairman & Managing Director)
You are right.
Greg Burns (Analyst)
Okay. What is the total design capacity of your current footprint? Just so we know how much that can expand. And the 113 that’s in backlog, the 113 megawatts, what is the timeline of bringing that online?
Raju Vegesna (Chairman & Managing Director)
Yeah, we will be delivering this beginning this quarter over the next three quarters. And the total design capacity after including the backlog to be delivered, we would be close to about 300 megawatt.
Greg Burns (Analyst)
Okay, great. And as you look at the competitive landscape within the market, obviously there’s a lot of investment going on in the data center space in India. How is pricing when we think about the ROI you’re looking to get on these investments? Are you seeing any changes in pricing, your ability to rent out space, or any factors that might impact the return on investment you’re getting on this spending?
Raju Vegesna (Chairman & Managing Director)
At this point in time, as far as Sify is concerned and 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 given this scenario, there is no pressure on pricing. In fact, the pricing is getting better and the returns are also improving.
Greg Burns (Analyst)
Okay, great. All right. Thank you very much.
Raju Vegesna (Chairman & Managing Director)
Thank you.
OPERATOR
Thank you. Your next question is coming from Pratik Singh from IIFL Capital. Your line is live.
Pratik Singh (Analyst)
Hi. Thanks for the opportunity. So just to get some clarity on this 113 megawatt number. So earlier when we said that 81 megawatts was deliverable in FY27, that is still on track and that is part of this 113. Is that the current understanding?
Raju Vegesna (Chairman & Managing Director)
You are right, Pratik.
Pratik Singh (Analyst)
Okay. And what is the current already commissioned build capacity which used to be 188 for two, three quarters?
Raju Vegesna (Chairman & Managing Director)
Yeah. So that is increasing to about 300 megawatts. That’s what is under construction now. So this 136 plus 113, which is 249 megawatt, will become revenue generating over the next few quarters.
Pratik Singh (Analyst)
Understood, understood. And regarding the IPO delays, is there any regulation as to one needs to do an IPO within so much time of the RHP filing in India or there is no such strict timelines after which we have to restart the process?
Raju Vegesna (Chairman & Managing Director)
There is a timeline available which is up to January end and beyond that it is a restart process.
Pratik Singh (Analyst)
Okay. And sir, as you used to mention in the last calls, in the hypothetical scenario of IPO getting delayed further, you will be supported by Kotak. Is that understanding still correct?
Raju Vegesna (Chairman & Managing Director)
Correct. Correct.
Pratik Singh (Analyst)
Understood, understood. My next line of questioning is around the digital services business. I think after a long time we saw this business turn EBITDA positive. Do you think this is something which can sustain or were there any one-off elements this quarter?
Raju Vegesna (Chairman & Managing Director)
It should get better from here. A lot of work has gone in and continues to happen here. The idea is for us to make our digital service entity 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.
Pratik Singh (Analyst)
Understood, understood. And my last question is based on your current footprint and land bank, what is the maximum design capacity, very ballpark range, you can reach without the need for further acquiring any land. Does it cap out at 300 or can we go higher?
Raju Vegesna (Chairman & Managing Director)
We should be able to do more than a gigawatt with the land bank which we have, across seven cities.
Pratik Singh (Analyst)
Okay. Any update on the edge data centers which we alluded to over the last few calls or is it still too early for that?
Raju Vegesna (Chairman & Managing Director)
Two edge data centers have gone live, which is in Lucknow and Mohali, that is Chandigarh. The other two edge data centers where work is happening as we speak.
Pratik Singh (Analyst)
Thanks. And my last question is on the Andhra data center. Is there any progress there or that’s something that we’ll focus on after our current set of projects on currently in parcels.
Raju Vegesna (Chairman & Managing Director)
You are right. We will first deliver on our existing commitments. But parallel we are working on the engineering part for the Visakhapatnam site and we will take it up at the appropriate time.
Pratik Singh (Analyst)
Thanks. Thank you for answering your questions. All the best.
Raju Vegesna (Chairman & Managing Director)
Thanks, Pratik.
OPERATOR
Thank you. Your next question is coming from Saurabh Araya from Oak Lane. Your line is live.
Saurabh Araya (Analyst)
Yeah. Hi sir. Am I audible?
OPERATOR
Yes, you are audible.
Saurabh Araya (Analyst)
Yeah. So yes, the first question is why QoQ there is decline in data center revenues. I think we added 5 megawatt last quarter, right?
Raju Vegesna (Chairman & Managing Director)
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 consequent to which there was an increase and there was also a power revenue which scaled up in that particular period from the existing customers.
Saurabh Araya (Analyst)
But how does it explain the decline, I mean to say.
Raju Vegesna (Chairman & Managing Director)
No, I was talking about why the previous was higher. Yeah. So to put 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. And power revenue, as you know, is a pass-through. It doesn’t impact the net generation. Am I clear, Sharad.
OPERATOR
Thank you. Your next question is coming from Greg Burns from Sidoti. Your line is live.
Greg Burns (Analyst)
Hi. So I guess just to follow up on that last question, so it’s more of just a timing issue with how the backlog is getting deployed as opposed to maybe a change in the trajectory of the data center business. Correct?
Raju Vegesna (Chairman & Managing Director)
Yeah. The backlog orders will get delivered beginning this quarter. Over the next three quarters it will get delivered.
Greg Burns (Analyst)
Okay, great. And then I had a last question about the network services growth this quarter. It was a lot higher than we expected and more than we’ve seen in recent quarters. Was there anything specifically driving that and is that a good level to build off of for our models?
Raju Vegesna (Chairman & Managing Director)
Yes, yes. As far as the network is concerned, you’d 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’ll continue to stay focused on that business growth as well.
Greg Burns (Analyst)
All right, thank you.
Raju Vegesna (Chairman & Managing Director)
Thank you.
OPERATOR
Thank you. Your next question is coming from Saurabh Araya from Oak Lane. Your line is live.
Saurabh Araya (Analyst)
Hello. So actually I got dropped. So you were…
Raju Vegesna (Chairman & Managing Director)
Answering. You dropped. I just, I was asking you whether I explained to you satisfactorily. You got it.
Saurabh Araya (Analyst)
No, actually I got dropped from the call.
Raju Vegesna (Chairman & Managing Director)
I’ll repeat, I’ll repeat. Sharad. I’ll repeat. I’ll repeat. Unlike quarter one, this quarter we did not have any enterprise implementation services income, which typically is a one-time income. That’s one reason. 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, it’s a pass-through, was lower. Those are the two reasons why between the two quarters there is a revenue change.
Saurabh Araya (Analyst)
Okay, but capacity was more in this quarter versus the last quarter.
Raju Vegesna (Chairman & Managing Director)
Yeah, correct, correct, correct, correct.
Saurabh Araya (Analyst)
And then how should we think about then, you know, these capacities panning out in two quarters? Because you said that most of the additions will happen in the second half.
Raju Vegesna (Chairman & Managing Director)
Yeah. In fact we have communicated that there is 130 megawatt of contracts, which is capacity which is scheduled for delivery, and it will get delivered beginning this quarter over the next three quarters.
Saurabh Araya (Analyst)
Okay, perfect. And since now network business has grown very strongly while the margin declined. So is it some… So how should one read this business in that sense? In past you have guided it will grow.
Raju Vegesna (Chairman & Managing Director)
Yeah, 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, so 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 width of the country.
And that’s one of the reasons why we are seeing growth.
Saurabh Araya (Analyst)
So when India’s capacity moves from one and a half gigawatt to 10 gigawatt, that’s what everybody’s saying for next five years, does it mean network business can grow in that line?
Raju Vegesna (Chairman & Managing Director)
Yes, yes, yes, yes, yes, yes.
Saurabh Araya (Analyst)
Can it become…
Raju Vegesna (Chairman & Managing Director)
4, 5x? I’m not too sure about 4 or 5. Volume-wise probably yes, but not revenue-wise because the unit economics of that business is different.
Saurabh Araya (Analyst)
Okay, so there is a pricing pressure always.
Raju Vegesna (Chairman & Managing Director)
It’s not pricing pressure, it’s inherent for that nature of business. Because as you scale the unit economics, the costs are significantly lower.
Saurabh Araya (Analyst)
But can you put some context here? If even if the industry is growing from one and a half to 10 gigawatt, what does it mean for network opportunity in terms of revenue?
Raju Vegesna (Chairman & Managing Director)
There are multiple legs of a network. One is the subsea cables which come here because most of the data center capacity is for serving the global workloads which are there. So there’ll be a subsea revenue. We don’t participate in the subsea revenue. And then connectivity between the data centers in India, so that business will see some growth for sure.
Saurabh Araya (Analyst)
Okay, so I think then maybe the better question would be among your three 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…
Raju Vegesna (Chairman & Managing Director)
Yeah, I don’t 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’s 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.
Saurabh Araya (Analyst)
Okay, perfect sir, thank you. Thank you very much. Thank you. All the best.
Raju Vegesna (Chairman & Managing Director)
Thank you.
OPERATOR
Thank you. Your next question is coming from Pratik Singh from IIFL Capital. Your line is live.
Pratik Singh (Analyst)
Thanks for the opportunity. Again, three questions. First, what’s the update on the Vizag cable landing station? Has work started there or it’s something which will make sense.
Raju Vegesna (Chairman & Managing Director)
Okay, so the Vizag cable landing station we have got the DoT approval now and we will start work on the same.
Pratik Singh (Analyst)
Okay. And just 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 take part in the growing demands.
Raju Vegesna (Chairman & Managing Director)
Yeah, yeah. There are good peers. There are some four, five good peers who are there and peers.
Pratik Singh (Analyst)
And on the CAPEX front, possible to quantify on the CAPEX front on the first half spend or maybe this quarter spent. How much is going into network and how much is going into digital?
Raju Vegesna (Chairman & Managing Director)
Now at this point of time, substantial amount of CAPEX is on the data center and then on the network side probably we are about 80:20 ratio.
Pratik Singh (Analyst)
So how does it work? I mean to satisfy more network demand? Is it like we are sitting on capacity and we don’t need to do Capex for that? Sorry if I don’t understand the business really well. On the network side how does it work?
Raju Vegesna (Chairman & Managing Director)
Yeah, on network side we have a model of a satellite delivery of services. And having said that, we will increase our spend on the network side over time. We currently are 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.
Pratik Singh (Analyst)
Thanks. And my last question is this 113 megawatt is entirely in Rabale and if yes, which towers are new?
Raju Vegesna (Chairman & Managing Director)
It is in Rabale and in Noida. A small capacity in Chennai as well.
Pratik Singh (Analyst)
Thanks a lot again.
Raju Vegesna (Chairman & Managing Director)
Thank you, Pratik.
OPERATOR
Thank you. And once again everyone, if you have any questions or comments please press star then one on your phone. Please hold while we poll for questions. Thank you. That concludes our Q and A session. I’ll now hand the conference back to Raju for closing remarks. Please go ahead.
Raju Vegesna (Chairman & Managing Director)
Thank you. Thank you for your time on this call. Have a great day. Thank you.
OPERATOR
Thank you everyone. This concludes today’s event. You may disconnect at this time and have a wonderful day. Thank you for your participation.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.