管理層發言
Good morning, everyone, and welcome to the Sify Technologies financial results for the third quarter of fiscal year 2025-2026. Please note that this conference is being recorded. I will now turn the conference over to your host, Praveen Krishna, Head of Investor Relations at Sify Technologies. Praveen, the floor is yours.
Thank you, Jenny. I'd like to extend a warm welcome to all our participants on behalf of Sify Technologies Limited. I'm joined on the call today by Mr. Raju Vegesna, Chairman; and Mr. M.P. Vijay Kumar, Executive Director and Group CFO. 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) 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 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 corporate website. 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 are according to the International Financial Reporting Standards or IFRS and will differ somewhat from the GAAP announcement made in previous years. The presentation of the most directly comparable financial measures calculated and presented in accordance with the GAAP and a reconciliation of such non-GAAP measures and of the differences between such non-GAAP measures and the most comparable financial measures calculated 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 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 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 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 Mr. Raju Vegesna, Chairman of Sify Technologies. Chairman?
Thank you, Praveen. Good morning, everyone. And thank you for joining us on the call. India's growth story has moved decisively from promising to performance. Strong economic fundamentals, policy continuity, and accelerating digital adoption are positioning India as a central pillar in the global technology ecosystem. India's IT is entering a new phase, one defined not only by scale but by leadership in digital infrastructure, cloud, and AI-led innovations. As enterprises and government intensify their focus on AI, cloud, and data-driven platforms, demand for secure, high-performance digital infrastructure is rising rapidly. At Sify, our strategy is aligned with this inflection point through a sustained investment in hyperscaler data centers, resilient networks, and AI-driven platforms, positioning us to enable the next decade of enterprise transformation in India. Let me now bring in our Executive Director and Group CFO, Mr. M. P. Vijay Kumar, to explain both the business and financial highlights. Vijay Kumar?
Yes. Thank you, Chairman. We continue to exercise fiscal discipline while making measured investments to strengthen our long-term capabilities. Our capital allocation across data centers, networks, and people for digital platforms remains guided by a disciplined approach to risk and future readiness with a focus on long-term value creation. Let me now expand on the business highlights for the quarter. The revenue split between the businesses for the quarter was Network services 37%, data center co-location services 40%, and Digital services 23%. In this quarter, data center co-location capacity of 9.1 megawatts was sold. As of December 31, 2025, Sify Network Services provides services via 1,214 fiber nodes, a 9% increase over the same quarter last year. And as at the same date, we have so far deployed 9,695 SD-WAN 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 Q3 of financial year 2025-'26. Revenue was INR 11,596 million, an increase of 11% over the same quarter last year. EBITDA was INR 2,470 million, an increase of 29% over the same quarter last year. Loss before tax was INR 257 million and after tax INR 329 million. Capital expenditures during the quarter were INR 3,452 million and cash balance at the end of the quarter, 31st December 2025, was INR 3,627 million. I will now hand over to our Chairman for his closing remarks.
Thank you, Vijay Kumar. Sify is committed to driving technology-led growth by enabling enterprises to modernize, expand, and capture new opportunities. Our resilient infrastructure and comprehensive portfolio of services provide a strong foundation to deliver sustainable value and long-term returns. As we execute on this road map, I want to thank you for your continued confidence and support in our vision for the future. Thank you for joining us on this call. I will now hand over to the operator for any questions.
分析師問答
Our first question is coming from Greg Burns of Sidoti & Company.
I just wanted to start off just asking about maybe an update on the timing for the IPO of Infinit Spaces. Are there any milestones that are upcoming? Or how should we think about the major milestones that still need to be completed and the expected timing for that IPO?
Yes, Greg, we filed the draft prospectus in the middle of October 2025. And usually, in the period of 3 to 4 months, we get the securities regulators' approval. We are expecting the approval of the draft prospectus this month. And we will be guided by the bankers on the exact timing of opening the issue and getting listed. Once we get the SEBI's approval this month, there are additional processes in terms of updating the draft prospectus with the financials as of 31 December. And based on the banker's guidance, we will go to the market for listing.
Okay. And I guess you mentioned that you had sold an additional, I think, 9 megawatts of capacity this past quarter. Could you update us on maybe what your total design capacity currently is and how much of that in total has been sold?
Yes. The total design capacity is 188 megawatts, out of which the capacity which is ready for service is 130 megawatts. And out of 130, the total sold capacity is about 127 megawatts.
Okay. Great. And then over the next 6 to 12 months, could you give us maybe an update on the roadmap for your new data center construction, maybe in terms of either DCs or capacity that you expect to bring online?
Yes. There are 2 facilities in our Rabale data center campus, which will go live in this calendar year for which we have contracted with the customer. And there are other 2 greenfield projects, which are under construction. One of which will get delivered in the middle of this calendar year and the other will get delivered in the middle of the next calendar year.
And the total capacity of those 4 facilities?
Okay. The aggregate capacity of all the 4 facilities at present is about 125 megawatts, but based on customers' actual deployment, the capacity could be a little higher because we are seeing customers bringing in AI workloads into the country. It has just begun. So the densities are expected to increase.
All right. And then lastly, the digital services are still operating at a loss. How should we think about that part of the business longer term? At what point do you expect that to maybe either be at breakeven or profitable? When are you going to start to get some operating leverage on the investments you're making there?
Yes. I don't want to make predictions, but I can provide some guidance. In the latter part of the next fiscal year, 2026-2027, we should hopefully reach breakeven. Depending on how the services market develops for our new offerings, which we are investing in, we expect to see profitability after that.
Our next question is coming from Ramesh Vijaj of StockHifi.
Sir, you mentioned the 12.16 megawatt capacity sold since June 2025. How much of this is already revenue generating?
Out of that, the revenue generating will be about 4 megawatts because a substantial part of the orders have come in December, which will generate revenue in the coming quarter.
What is the average contract tenure and return on capital employed per megawatt?
For hyperscalers, the average contracts are for a tenure of 7 years with renewal for 2 further terms of a similar period, and for enterprise contracts, it is 5 years and which usually tend to get renewed for similar periods. Return on capital employed, we measure it essentially for the stabilized facilities, which are facilities when they get fully populated. And for the fully populated facilities, the return on capital employed is in the high teens.
So this IPO, which you're coming out with Sify Infinit, is this proceed going to be used for debt reduction at the parent level? Or is it going to be used for fresh network expansion?
The IPO's primary portion will go for data center expansion. A portion of the funds will go towards retiring the existing loans, and we will replace those loans with lower-cost, longer-term infrastructure debt subsequently.
So how is Sify Infinit structurally separated like more debt, cash flow, everything, how exactly is it separated?
Yes. Sify Infinit Spaces is the 100% subsidiary of Sify Technologies Limited, a separate legal entity. Its separate financial statements are available on our website. They are also available in the IPO documents which we have presented. It's also available at the MCA portal. The separate financial statements are available. And since our debt is listed on the Bombay Stock Exchange, the quarterly results are also updated in the Bombay Stock Exchange portal.
Okay. Is the existing Sify shareholders' ADR going to get any kind of shareholder quota in the new IPO?
We have been advised by the bankers that the existing ADR shareholders are holders of American Securities and the legal framework does not allow any priority to be given. However, the U.S. shareholders who have a nonresident account in India can participate through the NRE account which you have here.
Our next question is coming from Prateek Singh of IIFL Capital.
The first question is on the depreciation. So basically, I understand that the management estimates useful life for power equipment to be around 8 years. Does this mean that after 8 years, we'll need to replace the power equipment? I don't think so, right? It's just for accounting, the power equipment would be lasting for 15, 20 years. Is this understanding correct?
Exactly. You're right, Prateek. In fact, we have been in business for about 25 years. And except for certain items like the UPS and the batteries, the rest of them have a life greater than 15 years. One of the reasons the company took a depreciation policy of an average of 8 to 10 years is to coincide with the pricing model, which the company adopts. So our pricing model assumes 8 to 10 years of capital recovery, and hence, the depreciation is synced to that.
The next question is on margins of the data center business, which is kind of steady state and growing very well for us. Margins, while I understand that they are stable, we saw a small dip in margin this quarter. So usually, when we have to forecast numbers, how should we look at it? Is it like hyperscalers? Are they driving pricing down or is the situation quite tight in India, and that's not the case? It might be due to power costs going up. How should we look at margins and the pricing environment going ahead?
Okay. The EBITDA margins are consistent between 44% to 45%, 100 basis points difference at times arises between quarters, depending on the customers ramping up their IT power consumption. For example, Rabale Tower 5 went live in the last 9 months, and those equipments have come in, which have contributed to capacity revenue, but the power revenues start scaling up over a period of time. Similarly, whenever new large capacities come live, there is that period of ramping up for about 6 to 9 months where you have some operating expenses, which later give us the operating leverage to reduce the same. So it generally fluctuates between 100 to 200 basis points. Otherwise, it's close to 45%.
Understood. And sir, so like you said, like sir said earlier that our design capacity is 188, installed is around 130, operational is 127. So did I hear it correct, the installed is 130, right? Or was it 150?
130.
Okay. So these are the same numbers as of June as per the DRHP. Does it mean that the CapEx that we are doing right now is going into capital work in process and we can see a step jump when a new facility is commissioned?
Correct. Correct. You're right. The design capacity of 188 between the DRHP of June and now is the same. A substantial amount of capacity is going to get added in this calendar year, where we have Rabale Tower 6 and 7, which will go live, and Rabale 11 also, which is going to go live. So you'll have a substantial capacity getting added.
What is the time difference we expect? I realize that design capacity is the bare minimum without UPS, generators, and other components, while installed capacity includes all of those. How long does it typically take for installed capacity to increase from 130 to 188? Is it around 6 to 7 months, or more like 12 months? In short, how much time is needed for installed capacity to catch up to design capacity?
Yes. The markets are segmented, with Mumbai and other cities having different experiences. In Mumbai, it takes about 15 months for any additional capacity added to reach full occupancy. In contrast, in other cities, where a tower concept is utilized with a core and shell approach to cater to future demand, it usually takes around 3 to 4 years to achieve full occupancy. However, if a hyperscale customer enters the market, this timeline can shorten. Regarding pricing, we are not facing any challenges, whether with hyperscale or enterprise customers. The return on capital remains stable, and customers prioritize timely availability of capacity. Additionally, the quality of the service provider's products and their operations and maintenance is a crucial factor for customers, and this remains true now.
Understood. And sir, just a bit...
Prateek, your line cut out for a second. Would you mind reasking the question, please?
Sure. So is my line clear now?
Better. Better.
Yes. So on the related party disclosures in the DRHP, when we talk about expense transfer and revenue transfer with Sify Technologies, I wanted to get more sense as to what these are and how should we look at it?
The related party transactions essentially involve two main aspects: revenue transfer and expense transfer. These are linked to certain contracts that were established by the parent company before the data center business was separated. Since those customer contracts primarily pertain to public sector companies, they remain with the parent company. Therefore, any revenue generated is passed directly to the data center entity according to the business transfer agreement, resulting in no margin for the parent company – just a straightforward revenue and expense transfer. Additionally, there are three data center assets owned by the parent company that have been leased to the subsidiary. This arrangement was made for tax efficiency when the business transfer occurred in 2020, allowing the assets to be retained in the parent company while leasing them to the subsidiary on a long-term basis. Regarding the company’s market strategy, there is a dedicated go-to-market team for the hyperscale business within the data center entity, but for the domestic enterprise business, we utilize the existing go-to-market capabilities from the parent company, which serves about 5,000 enterprise customers. The associated go-to-market and marketing costs are allocated to the data center entity based on actual expenses.
Understood. Just one last clarification. When you mentioned that the capacity sold in the December quarter will generate revenue in the upcoming quarter, do we mean March or June?
March, March, March. A few more questions we can interact any time at your convenience, please feel free to reach out to us.
Our next question is coming from Sourabh Arya of Oaklane Capital.
Am I audible?
Yes, you are.
Sir, my first question is actually on the Network business. So why is this business flat in this quarter?
Yes. As far as the Network business is concerned, during this quarter, we had some price corrections for our existing customers. Second, there is also a small shift of customers moving from MPLS to the Internet, and when the customers move from MPLS to Internet because of the new technologies like SD-WAN and SASE, the price realization comes down. But at the same time, we manage our costs also to protect our margin. So volume-wise, we would have grown, but the revenue numbers would look a little flattish.
So does that mean this exercise will continue? And second, then how should one look at the growth of this business? Because I was under the impression, ultimately, it should grow in line with the data center business.
Correct. Correct. Correct. And that's actually what will happen. The Network business will grow similarly to the Data Center business, but probably not at the same pace because Data Center growth momentum is significantly higher, but Network will also grow alongside the Data Center business.
Okay. And second, there's continuous new Vizag and this Google partnership on the networking side. Can you explain that? What exactly is happening? And what kind of CapEx will Sify be doing? Because these are very large numbers that keep coming.
Yes, yes. So as far as Sify Network business is concerned, you might be aware we are a carrier-neutral cable landing station operator in the country. We have one operating cable landing station in Mumbai for over a decade where there are 3 cable systems, which are landing and those cable systems may take them into the city to the various data centers. Now some of the hyperscalers, as part of their overall strategy, are looking at landing capacities in other cities in India. Visakhapatnam happens to be one such chosen location. So Google for their cable landing system, which is coming on the eastern side, has chosen Sify as the partner for setting up the cable landing station where their cable will come and land. This cable will land in a data center, which we are setting up in Visakhapatnam, which we call as an edge data center, where we'll have some anchor customers as well. This cable will land there.
The investment for this cable from the data center and the cable landing station is not a material investment. It's a very strategic investment, though. The material investment will be carrying the capacity from the cable landing station to Google's own data center, which they are putting up in Visakhapatnam, which is not too much of a distance. So that will be a capital investment to be done. At this point in time, we don't have a real estimate of how much that is. But typically, those investments are largely funded by the customer themselves, so they would not be balance sheet heavy for Sify Technologies.
Okay. That is fine. So you will continue to benefit from this but not by putting too much of capital.
Correct. Correct. It's a very strategic investment. What it actually helps us in the long term is carrying the traffic which comes to the subsea cable systems into the data centers, length and breadth of the country. So that's the kind of strategic position it comes. It's similar to an international cable landing station being similar to an international airport where the traffic comes in. From there, you carry the traffic to your network into the domestic cities. So that's a simpler way of understanding the cable landing station investment.
Okay. Okay. And one last question. So you said that the new data centers, the Rabale, the new towers, the capacity is some 30s, right, per tower. But you are seeing some AI investments if they can upgrade the capacity. But does it mean the CapEx per megawatt for some of these upgrades is far more than your traditional $5 million, $6 million per megawatt investment, which happens in normal scenarios?
Yes. So currently, what is happening, Sourabh, is the 4 data centers, 2 of them are 77 megawatts, the other 2 are 55 megawatts. The 77 megawatts we are going to host AI infrastructure for the customer. So a customer is bringing in a substantial amount of AI into that facility. This facility was originally designed for 52, whereas now it's going to be for 77 megawatts. The incremental capacity, incremental CapEx cost for the AI is marginal for us, and some of it is getting funded by the customers themselves because they are bringing some proprietary design. Second, coming to the 52 megawatts I mentioned, which has been originally designed for cloud workloads. If the customer is coming with AI workloads, we have the opportunity of increasing that 52 megawatts to a higher capacity. So it depends eventually on what kind of workloads the customer is bringing in.
Sure, this is helpful. Just one last question. When the normal data centers are in operation, you have air cooling. Does that mean that the capital expenditures will not increase much as it’s primarily handled by the customers? Does this indicate that none of the new capacities utilize liquid cooling, which is quite expensive? And even if there are such systems, the costs would be covered by the customers.
No, no, no. That's not the right way to understand. All our data centers which have gone live since 2024 are NVIDIA certified and capable of hosting liquid cooling systems. They're all designed for that. Our new facilities, Rabale 6 and 7, which are coming, right from day 1, will have a liquid cooling system. The commercial engagement with the customers varies from customer to customer, contract to contract. Some contracts incur the whole amount and it gets added to the capacity charges. Some customers, the customer invests in that for which we enable the same. So it depends on the contract and the customer. Whenever you have the liquid cooling system coming in, the incremental cost is approximately $1.3 million per megawatt.
$1.3 million per megawatt, right?
Correct. Correct. Correct.
Okay. Okay. That is helpful, and that is borne by the customer or by you?
As I told you in some cases, the customer does it. Sometimes we do it and charge from the customers.
Okay. Perfect. And one last, if I can squeeze, is on the data services side, though you gave the guidance that maybe we will see some flat margins for breakeven by next year, second half. But what kind of ramp-up in this business is expected? Like because you've been building this business for quite some time now. And what are the green shoots?
We are expecting a combination of actions to help us get to breakeven. One is from our portfolio of services. We will look at focusing on 2 or 3 services more for revenue ramp-up like we have the cloud and managed services, the network managed services, and the security managed services. Those are a portfolio which we will see some revenue growth to help us get to breakeven, where we are actually developing capabilities around AI ops to bring the differentiation to the customers. That's part one. Some of the portfolios where the scale of opportunity is limited, we might decide to repurpose those resources and get them to businesses that are productive. So we are looking at that carefully, and we will do it in a calibrated manner over the next 3 to 4 quarters. We have good quality resources engineers, very young engineers, whom we have trained good quality people. So we would like to monetize their capabilities by increasing the focus on a certain set of services.
Our next question is coming from Ramesh Vijaj of StockHifi.
Can you hear us?
Yes, we can hear you now. You can ask a question.
There is a small thing that we would like to know. How should we go forward with this equity stability, especially such as CapEx and debt going forward, which is continuing to rise?
Yes, as the capital requirements are substantially for the data center business, our initiative now to do an IPO helps us to create the stock as a currency. The initial primary capital we are raising should take care of the demand growth for the next 2 to 3 years. Subsequently, we should be able to do a combination of rights and QIPs to raise capital to meet the incremental capital requirements. In fact, this listing is essentially to fund the growth for the future, given the business has very good prospects over the next decade.
What kind of offloading has occurred or what new equity is being issued? What percentage would be impacting existing shareholders for the Sify Infinit?
The DRHP has been filed and it is in the company's domain. I would encourage, given the fact that these are all subject to capital market regulations, I encourage you to read the same. The primary capital we are raising is INR 2,500 crores, and there's an offer for sale from our capital partner, Kotak, where we have Arya and GIC as LPs, where they'll be liquidating a small portion of their existing holding for INR 1,200 crores. So the total issue size is INR 3,700 crores.
And our next question is coming from Prateek Singh of IIFL Capital.
Just a clarification on an earlier answer. So when we said we have 4 capacities in line, Rabale, 2 brownfield, and 2 greenfield. So these 2 greenfield are in Rabale as well or they are in some other city or some area?
Yes, Prateek, all the 4 are greenfield. All the 4 are greenfield. 2 of them are right adjacent to the existing facilities. The other 2 are right opposite the existing facilities. They all constitute a single CapEx. All the 4 are greenfield projects.
Okay. In Rabale itself, right? All 4 are in Rabale.
In Rabale. They're all part of the same campus and all the 4 are greenfield projects.
Understood. When we sign these AI contracts, do we expect to maintain a similar return on capital employed in AI contracts as we do in cloud, or would they be a bit higher?
At present, we are seeing the same kind of returns. Early stages, Prateek; let's see how it increases in the future. But at present, it's the same set of returns.
Okay. And the Andhra Edge facility will be 50 megawatts. Is that the right understanding?
No, no, no. The Andhra Edge facility is on a land parcel of 3.6 acres. The initial design could be for 5 acres, but it's early stages. Once everything is firmed up, we will communicate to you. It's early stages. But typically, all the edge sites, we are designing it for 5 megawatts. And just to clarify on that Andhra one. Apart from the 3.6, we have a land allotment of 50 acres. Probably your 50-megawatt context came there. So we have a land allotment of 50 acres, which is there in Visakhapatnam, which is for the future capacity additions depending on how the demand comes in.
Well, we appear to have reached the end of our question-and-answer session. I will now hand back over to Raju for any closing comments.
Thank you for joining us on the call. Have a good day. Thank you.
Thank you very much. This does conclude today's call. You may disconnect your phone lines at this time, and have a wonderful day. We thank you for your participation.