Sify Technologies Limited

Good day ladies and gentlemen, and welcome to the CFE Technologies financial results for full year 2025-26. At this time, all participants are on a listen-only mode, and the floor will be open for questions and comments following the presentation. If anyone should require operator assistance during the call, please press star zero on your telephone keypad. And please note, this call is being recorded. I will now turn the conference over to your host, Mr. Praveen Krishna, Head of Investor Relations. Praveen, the floor is yours.

Thank you, Ali. I would like to extend a warm welcome to all our participants on behalf of CIFI Technologies Limited. I'm joined on the call today by my chairman, Mr. Raju Vaik Sena, 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 Lurie Group, our IR agency, 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 cifitechnologies.com slash investors. A replay of today's call may be accessed by dialing on the number provided in the person or by accessing the webcast in the investor information section of the CIFI corporate website. Some of the financial measures referred to during this call and in the earnings release may include non-GAAP measures. The fees results for the year 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 will be made available on the city'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 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. Those lists are intended to identify certain principal factors that would 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. I would now like to introduce Mr. Rajiv Exmer, my chairman.

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 cornerstone 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 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, SIFI is uniquely positioned to partner with 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 strengths 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. Vijaykumar, to explain both the business and financial highlights for the year. Vijaykumar?

Thank you, Chairman. Our businesses continue 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 as equity in February 2026, is recognized as expense in the statement of income. We have received the final observations from CEPI on our draft recurring prospectus for a data center subsidy, CEPI Infinite Spaces 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 5071 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 39%, 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 co-location services, and decreased 67% for digital services. The data center subsidiary sold 17 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, SIFI provides network services via 1,224 fiber nodes, an 8% increase over the same quarter last year. As of March 31, 26, SIFI deployed 10,340 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 the year. Revenue was INR 44,877 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 lost after tax was INR 1366 million. Capital expenditure during the year was INR 13282 million. I will now hand over to our chairman for his closing remarks. Chairman.

Thank you, Vijay Kumar. Our businesses are mutually reinforcing well as that together They 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. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. and you may press star 2 if you wish to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Our first question is coming from Greg Burns with Sedotian Company. Your line is live.

Good morning. Could you just Give us the numbers around what the existing design capacity for your data center business is and how much operational capacity has been sold.

Yeah. 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.

At the end of March.

as of March 26th.

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

Yeah, that is a backlog. That is for new facilities which are currently under construction, which will go live in the early part of the second quarter.

Okay.

And will be delivered in a free manner to the customer.

Okay. Perfect. And then in terms of CapEx, I guess it was 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?

The capex will be higher for this year. Given that we are almost doubling our capacity, it will be significantly higher.

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

At present, we aren't seeing anything here. There is very good support from the union government as well as the state government 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.

Okay, great. Thank you.

Thanks, Jay.

Thank you. Once again, ladies and gentlemen, if you have any questions or comments, please press star 1 on your telephone keypad. Our next question is coming from Prateek Singh with IFL Capital. Your line is live.

Hi. Thanks for this opportunity. Just taking it ahead from Greg's question, I note that we kind of, in the DRSP, we have given numbers on build capacity installed and operational, which was 188, 127, and 111 as of FY25 end. So I understand that 188 is still 188. Can you just give us a sense as to how the other two numbers have changed, which are installed and operational?

The 127 meg, which is installed, is at 140. And 111 is at 129.

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? Correct. So, does it mean... And it will be delivered in a phased manner. Okay. Okay. Yeah. So typically that takes 15 to 18 months for the entire 81 megawatts to be generated?

No, the current customer schedule is to deliver it within this financial year.

Understood. And another question is 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?

No, I am talking about doubling of the revenue generating capacity.

And also, we will build the design capacity also beyond that. Beyond 180, 180.

Understood. Understood, sir.

And just one last question. So, given that there is so much happening, I visited your awesome good site also last month and I noticed that we are also you know providing the opportunity of liquid cooling so to get a sense as to what kind of EBITDA per megawatt how liquid cooling would differ versus the current scenario at least one 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?

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

Understood. Understood. Thanks. I'll join back with you.

Yeah. Thank you.

Thank you. Our next question is coming from Sri Tazartada, who is an investor. Your line is live.

Good morning, sir. This is Srikant here. I almost joined all of your earnings call. 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 been decided or there have been speculations, somebody is quoting one number, somebody else is quoting another number? Those two would be my specific questions.

Okay. Let me take the latter one. The size is already communicated as part of the DRHP. It is 2,500 crores of primary and 1,200 crores of offer for sale, a partial exit from the existing growth capital partner, Kotak. So total 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 from the bankers on the timing of the actual issuance and listing. As management, we have done our roadshows. Approvals are all in place. So, we will get guided by the bankers for the next steps.

And at those numbers, what does it translate? to the enterprise value of CP Infinity Spaces?

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

Okay. Okay. Not a problem.

Yeah. Thanks, Shrikant. Thank you.

Thank you for the opportunity.

Thank you.

Thank you. Just a quick reminder, ladies and gentlemen, it's Star 1 if you have any questions or comments. We have another question from Prateek Singh with IFL Capital. Your line is live.

Hi. Thanks for the follow-up. Sir, in the last call, if I remember correctly, we had said that we are working on two 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 two expansions are coming in? Are they both in Nrabale or in Noida 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?

Both of them are at Rabalai Pratik and the facility which you 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 will be delivering to the customer now. And right opposite, you would have seen the other two towers which are the 52 megawatt and based on the customer engagement, it could The final usage of that could be higher than 52. 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.

And this 52 also will be commissioned or will be... Sorry.

Yeah, 52 part of it will get commissioned this financial year and other part, the first quarter of next financial year.

Thank you. So, you were saying something?

Prateek, 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 two facilities which are getting ready for delivery.

chilled. Thanks. Thanks a lot.

Thank you. Our next question is coming from Surav Arya with Oakland Capital. Your line is now.

Hi, sir. Am I audible? Yes. Hi. You're audible. The first question is can you give some color for all three businesses going into next year, like obviously, you know, you were expecting the last quarter improvement in data services and even improvement in network business. So how should we think about, you know, all three businesses from, you know, revenue growth and margin perspective?

Yeah, typically it's forward-looking statements and we refrain from that. But I can just give you a 30,000 feet view. Our data center business growth numbers, I have already communicated as part of our communication. As against 129 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 service business is concerned, it's organically managed. 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 decade 18 to 24 months and as and when the consumption picks up in the domestic market we 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 and on the margin side if you could give like you were expecting break even of data services business so how should we yeah yeah I will not be able to give a specific quarter. There is work happening to get to breakeven. But I will not be able to give a specific quarter when we will achieve that.

Okay. Sure. But over two years, you expected to turn around? How should we look at the progress of this business then?

No, you should see quarterly improvement going forward, but I think two years is a very reasonable period to see that we get to break events. It's a very reasonable period.

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? Yes.

We are seeing that happen for our data center co-location business and consequently to our network business as well.

Okay. Perfect, sir. Thank you. Thank you very much. Thank you.

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

Thank you for everyone and your time on this call. Have a good day.

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.

Thank you.