Sify reports Consolidated Financial Results for Q3 FY 2023-24
- Revenue decreased by 3% compared to the same quarter last year.
- EBITDA increased by 4% over the same quarter last year.
- Losses before tax were INR 20 million and after tax were INR 14 million.
- CAPEX during the quarter was INR 1,087 million.
- Sify has deployed 6920 contracted SDWAN service points across the country.
- Sify invested USD 0.15 million in start-ups in the Silicon Valley area.
- Losses before and after tax compared to net profit in the same quarter last year.
- Digital services revenue decreased by 22.36% compared to the same quarter last year.
Insights
The reported financials indicate a mixed performance, with a slight revenue decline of 3% year-over-year, contrasting with a modest EBITDA growth of 4%. This suggests cost management measures might be in place, as EBITDA growth in the context of falling revenue typically reflects improved operational efficiency or a reduction in variable costs.
However, the presence of a net loss after tax, as opposed to a net profit in the same quarter last year, is concerning. The loss is attributed to higher depreciation and interest costs, which could be indicative of recent capital expenditures or increased borrowing. The CAPEX of INR 1,087 Million suggests significant investment, likely in expanding infrastructure and capabilities, aligning with the management's commentary on Data Center capacity and network footprint expansions.
From an investor's perspective, the long-term benefits of these investments must be weighed against the short-term financial strain. The interest on CCDs (Compulsorily Convertible Debentures) being recognized as an expense, despite being accounted as equity, may also raise questions about the company's capital structure and future financial obligations.
Examining the revenue split, the digital services segment has experienced a significant decline of over 22%, which could be a red flag for investors, signaling potential issues with product offerings or competitive pressures in this segment. In contrast, the Data Center services and Network services show growth, which may reflect the company's successful alignment with market demand for infrastructure and connectivity solutions.
The expansion in SDWAN service points and fiber nodes suggests a strategic focus on improving the company's network infrastructure, likely to enhance service delivery and customer satisfaction. The investment in Silicon Valley start-ups through the Corporate Venture Capital initiative represents a strategic move to stay abreast of emerging technologies and innovation.
For stakeholders, the key question is whether the company's strategy of diversifying and investing in new technologies will translate into revenue growth and market share expansion, offsetting the current downturn in digital services.
The company's performance must be contextualized within the broader economic environment. The chairman's commentary on pro-industry regulatory initiatives and an encouraging investment climate in India suggests that macroeconomic factors are favorable for business expansion. Yet, the financial results do not fully mirror this optimism, which could imply either a lag in realizing the benefits of these conditions or inefficiencies within the company's operations.
The emphasis on skilling personnel and digital infrastructure recalibration indicates a response to the evolving digital economy and the necessity for businesses to adapt to maintain competitiveness. The company's investments in Data Center capacity and network footprint are in line with the increasing demand for digital infrastructure services, which could lead to long-term gains.
However, the current losses and increased debt levels raise questions about the sustainability of the company's growth strategy, especially if the economic environment becomes less favorable or if competitive pressures intensify.
Revenues of INR 8659 Million. EBITDA of INR 1689 Million.
CHENNAI, India, Jan. 18, 2024 (GLOBE NEWSWIRE) --
EARNING CALLS DETAILS
January 18, 2024| 8:30 AM ET
To join: Toll Free: 888-506-0062, International: 973-528-0011, Participant Access Code: 219546
On the call: Mr. Raju Vegesna, Chairman of the Board, Mr. M P Vijay Kumar, Executive Director & Group CFO and Mr. Kamal Nath, Chief Executive Officer
Live webcast: https://www.webcaster4.com/Webcast/Page/2184/49670
Archives: Toll Free: 877-481-4010, International: 919-882-2331, Replay Passcode: 49670.
Replay available until Thursday, January 25, 2024.
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HIGHLIGHTS
- Revenue was INR 8,659 Million, an decrease of
3% over the same quarter last year. - EBITDA was INR 1,689 Million, an increase of
4% over the same quarter last year. - Losses before tax was INR 20 Million. Losses after tax was INR 14 Million. These are compared to a net profit in the same quarter last year, with the difference primarily due to higher depreciation and interest costs.
- CAPEX during the quarter was INR 1,087 Million.
| (IN INR MILLION) | 31.12.2023 | 31.03.2023 |
| EQUITY | 21,979 | 17,145 |
| BORROWINGS | ||
| Long term | 17,272 | 13,818 |
| Short term | 6,122 | 6,662 |
MANAGEMENT COMMENTARY
Mr. Raju Vegesna, Chairman, said, “A combination of pro-industry regulatory initiatives, an encouraging investment climate and abundant skilled human capital are factors that continue to dominate enterprise business strategies for India. Business leaders are united in their view that India is central to their growth plans and are aggressively ramping up their local investment.”
Mr. Kamal Nath, CEO, said, “As Enterprises pursue their digital transformation and digitalisation objectives, they are also re-calibrating their digital infrastructure across hybrid cloud, network, security and edge infrastructures. Customer experience, business continuity, cyber security, application modernization and overall adoption of AI models are the prime drivers for this recalibration.
Our infrastructure investments and services portfolio are fundamentally aligned to meet the customer goals. Simultaneously, we are continuously engaged with our customers to identify their specific needs and selectively recalibrate our propositions to support the same.”
Mr. M P Vijay Kumar, ED & Group CFO, said, “We continue to invest in bringing more Data Center capacity to the market, extending our network footprint and skilling our people on new tools. These investments are being made ahead of the curve and will reflect on our net profit for the near future. The interest on CCDs, accounted as equity in accordance with GAAP, are recognised as expense in the statement of income.
The cash balance at the end of the quarter was INR 6,037 Million.”
BUSINESS HIGHLIGHTS
The Revenue split between the businesses for the quarter was Data Center colocation services
| Business Revenue (INR Millions) | Q3 FY 2023-24 | Q3 FY 2022-23 | FY 2022-23 | % Growth Q3 2023-24 vs Q3 2022-23 | |
| Data Center services | 2,732 | 2,409 | 10,125 | 13.42 | % |
| Digital Services | 2,449 | 3,154 | 9,989 | -22.36 | % |
| Network services | 3,477 | 3,332 | 13,289 | 4.36 | % |
| TOTAL | 8,658 | 8,895 | 33,403 | -2.66 | % |
- As on Dec 31, 2023, Sify has deployed 6920 contracted SDWAN service points across the country.
- Sify provides services via 974 fiber nodes across the country, a
15% increase respectively over same quarter last year. - This quarter, Sify invested USD 0.15 Million in start-ups in the Silicon Valley area as part of our Corporate Venture Capital initiative. To date, the cumulative investment stands at USD 7.22 Million.
CUSTOMER ENGAGEMENTS
Among the most prominent new contracts during the quarter were the following:
Data Center Services
- One of India’s largest private banks signed up for colocation services.
- A global financial and technology company is migrating colocation services from a competitor to Sify’s Data Center.
- India’s largest payment bank is expanding its capacity at multiple Sify Data Centers.
- A multinational stockbroking firm, entering India, contracted for colocation space.
Digital services
- A Private bank, an industrial major, a pharmaceutical player, a State government department and a division of the Union government contracted to migrate their on-premise Data Center to Sify’s Cloud platform.
- A domestic steel major and a logistics player contracted for greenfield cloud implementation.
- Two nationalized banks signed up for commissioning of Private Cloud at their onsite Data Centers.
- A housing finance major, a major real estate player, an insurance multinational and a pharmaceutical player signed up for services like DRaaS and IaaS.
- Sify contracted for managed services with multiple global players in logistics, investment, skill development, and with a State government’s IT platform.
- Contracts for security services were signed with a new age health platform, a design major and an insurance brokerage firm.
- A Public sector bank and a Construction major signed up for collaboration services.
- A multinational industrial lubricant manufacturer signed up for Sify’s supply chain integration platform.
- The government’s central platform for aspiring bankers, a government division, a research and training institute and a banking think-tank signed up for online assessments.
Network Services
- A prominent NBFC signed up for integrated network services spanning their branches, data center network, SSE and Managed services.
- One of India’s premier stock exchanges signed up to consolidate and transform their member network, while a spirits major signed up to connect their manufacturing locations.
- One of the largest private banks contracted for network expansion.
- A nationalized bank and a private insurance major signed up for managed and secure SDWAN at multiple locations.
- One of India’s largest MNCs contracted for collaboration services.
- An international audit major signed up for Hosted Contact Center and a prominent IT player signed up for omni channel communication.
- Sify’s Edge connectivity now reaches 43 Tier 2 cities in India with 16 of them offering internet exchanges.
- Network expansion has been completed in 3 major Indian cities, while the SAARC gateway was expanded to 500G capacity.
FINANCIAL HIGHLIGHTS
| Unaudited Consolidated Income Statement as per IFRS | ||||||
| (In INR millions) | ||||||
| Quarter ended | Quarter ended | Quarter ended | ||||
| Description | December | December | September | |||
| 2023 | 2022 | 2023 | ||||
| Revenue | 8,659 | 8,896 | 8,791 | |||
| Cost of Revenues | (5,390 | ) | (5,767 | ) | (5,509 | ) |
| Selling, General and Administrative Expenses | (1,580 | ) | (1,510 | ) | (1,763 | ) |
| EBITDA | 1,689 | 1,619 | 1,519 | |||
| Depreciation and Amortisation expense | (1,183 | ) | (996 | ) | (1,213 | ) |
| Net Finance Expenses | (525 | ) | (420 | ) | (361 | ) |
| Other Income (including exchange gain/loss) | 24 | 53 | ||||
| Other Expenses (including exchange loss) | (1 | ) | - | - | ||
| Profit/(Loss) before tax | (20 | ) | 227 | (2 | ) | |
| Current Tax | (9 | ) | (92 | ) | (202 | ) |
| Deferred Tax | 15 | 123 | 164 | |||
| Profit/ (Loss) for the period | (14 | ) | 258 | (40 | ) | |
| Profit/ (Loss) attributable to: | ||||||
| Reconciliation with Non-GAAP measure | ||||||
| Profit/ (Loss) for the period | (14 | ) | 258 | (40 | ) | |
| Add: | ||||||
| Depreciation and Amortisation expense | 1,183 | 996 | 1,213 | |||
| Net Finance Expenses | 525 | 420 | 361 | |||
| Other Expenses (including exchange loss) | 1 | - | - | |||
| Current Tax | 9 | 92 | 202 | |||
| Less: | ||||||
| Deferred Tax | (15 | ) | (123 | ) | (164 | ) |
| Other Income (including exchange gain/loss) | - | (24 | ) | (53 | ) | |
| EBITDA | 1,689 | 1,619 | 1,519 | |||
About Sify Technologies
A Fortune India 500 company, Sify Technologies is India’s most comprehensive ICT service & solution provider. With Cloud at the core of our solutions portfolio, Sify is focused on the changing ICT requirements of the emerging Digital economy and the resultant demands from large, mid and small-sized businesses.
Sify’s infrastructure, comprising state-of-the-art Data Centers, the largest MPLS network, partnership with global technology majors, and deep expertise in business transformation solutions modelled on the cloud, make it the first choice of start-ups, SMEs and even large Enterprises on the verge of a revamp.
More than 10000 businesses across multiple verticals have taken advantage of our unassailable trinity of Data Centers, Networks and Security services and conduct their business seamlessly from more than 1600 cities in India. Internationally, Sify has a presence across North America, the United Kingdom and Singapore.
Sify, Sify Technologies, Sify Infinit Spaces and Sify Digital Services are registered trademarks of Sify Technologies Limited.
Non-IFRS Measures
This press release contains a financial measure not prepared in accordance with IFRS. In particular, EBITDA is referred to as “non-IFRS” measure. The non-IFRS financial measure we use may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies - refer to the reconciliation provided in the table labelled Financial Highlights for more information. In addition, these non-IFRS measures should not be considered in isolation as a substitute for, or as superior to, financial measures calculated in accordance with IFRS, and our financial results calculated in accordance with IFRS and reconciliation to those financial statements should be carefully evaluated.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements contained herein are subject to risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Sify undertakes no duty to update any forward-looking statements.
For a discussion of the risks associated with Sify’s business, please see the discussion under the caption “Risk Factors” in the company’s Annual Report on Form 20-F for the year ended March 31, 2023, which has been filed with the United States Securities and Exchange Commission and is available by accessing the database maintained by the SEC at www.sec.gov, and Sify’s other reports filed with the SEC.
For further information, please contact:
| Sify Technologies Limited Praveen Krishna Investor Relations & Public Relations +91 44 22540777 (ext.2055) praveen.krishna@sifycorp.com | Grayling Investor Relations Lucia Domville +1-646-824-2856 Lucia.Domville@grayling.com | 20:20 Media Nikhila Kesavan +91 9840124036 nikhila.kesavan@2020msl.com |
FAQ
What were Sify's revenues and EBITDA in the latest quarter?
How did Sify's revenue and EBITDA compare to the same quarter last year?
What were Sify's losses before and after tax in the latest quarter?
What was the revenue split between Sify's Data Center, Digital, and Network services?
How did Sify's Digital services revenue perform in the latest quarter?
