Release Date: October 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sify Technologies Ltd (SIFY, Financial) reported a 17% increase in revenue over the same quarter last year, reaching INR 10,275 million.
- EBITDA increased by 29% compared to the same quarter last year, indicating strong operational performance.
- The company commissioned 6.5 megawatts of data center capacity in Mumbai, expanding its infrastructure capabilities.
- Sify Technologies Ltd (SIFY) has a diverse revenue stream with data center colocation services, digital services, and network services contributing 32%, 32%, and 36% respectively.
- The company is actively investing in sustainable practices, particularly in its data centers, aligning with broader digital transformation initiatives.
Negative Points
- Profit before tax was only INR 87 million, and profit after tax was INR 49 million, indicating thin profit margins.
- Increased capital investments have led to higher depreciation and interest costs, impacting financial statements.
- The company faces competitive pressures from both domestic and international players entering the Indian data center market.
- Sify Technologies Ltd (SIFY) has significant debt, with plans to continue using debt for data center expansion, which could impact financial flexibility.
- The company's gross margins remain relatively low, with no immediate prospects of reaching higher levels typical of IT services companies.
Q & A Highlights
Q: Where are you seeing the most demand growth coming from, hyper scalers or enterprise customers? How is AI reshaping the demand environment?
A: Raju Vegesna, Chairman & Managing Director, explained that Sify is experiencing growth from both hyper scalers and enterprise customers. AI is just starting in India, and enterprises are beginning to explore AI applications. Sify is prepared for AI demands, being the first certified by NVIDIA for advanced cooling technologies, and sees potential for both Indian and global markets.
Q: Can you update us on the number of data centers you operate and the roadmap for capacity expansion?
A: M P Vijay Kumar, Executive Director & Group CFO, stated that Sify currently has 120 megawatts of live data center capacity, with 105 megawatts already consumed. They have ongoing Greenfield projects with a design capacity of 52 megawatts, initially enabling 6 megawatts to go live soon.
Q: Digital services were stronger than expected this quarter. What drove this growth?
A: M P Vijay Kumar attributed the growth to project-based revenues in the network managed services business, which positively impacted the quarter's results.
Q: How does the new non-convertible debt compare to existing debt, and what are the plans for its use?
A: M P Vijay Kumar explained that the new debt, raised in the data center co-location subsidiary, is 40 basis points lower than the debt it replaces. It has a 15-year term with a five-year moratorium and is used to replace existing debt, supporting data center capacity growth.
Q: What are the average contract terms for your data center customers, and how do they compare between domestic and international clients?
A: M P Vijay Kumar noted that hyper scale contracts average nine years, while enterprise contracts average five years, both with renewal potential. Historically, Sify has experienced almost no customer churn.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
