Sify Applied sciences Restricted (SIFY) This autumn 2024 Earnings Name Transcript

Sify Applied sciences Restricted (NASDAQ:SIFY) This autumn 2024 Earnings Convention Name April 22, 2024 8:30 AM ET

Firm Members

Praveen Krishna – Head of IR
Raju Vegesna – Chairman, CEO & MD
Kamal Nath – CEO
M. P. Vijay Kumar – Group CFO & Entire-Time Director

Convention Name Members

Greg Burns – Sidoti & Firm

Operator

Good morning, everybody, and welcome to Sify Applied sciences Monetary Outcomes for the Fourth Quarter and Fiscal 12 months 2023 to 2024. Presently, all individuals have been positioned on a listen-only mode, and the ground might be opened for questions after the presentation. [Operator Instructions] Please notice, this convention is being recorded.

I’ll now flip the convention over to your host, Praveen Krishna. Praveen, over to you.

Praveen Krishna

Thanks, and good morning, Jenny. I want to lengthen a heat welcome to all of our individuals on behalf of Sify Applied sciences Restricted. I am joined on the decision at the moment by my Chairman, Raju Vegesna; my Government Director and Group CFO, Mr. M. P. Vijay Kumar; and my Chief Government Officer, Mr. Kamal Nath.

Following our feedback on the outcomes, there might be a chance for questions. When you wouldn’t have a duplicate of our press launch, please name Weber Shandwick at +1 (212) 546 8260, and we may have one despatched to you. Alternately, it’s possible you’ll acquire a duplicate of the discharge on the Investor Data part on the corporate’s company web site at www.sifytechnologies.com/traders. A replay of at the moment’s name could also be accessed by dialing in on the numbers offered within the press launch or by accessing the webcast within the Investor Data part of the Sify company web site.

A number of the monetary measures referred to throughout this name and within the earnings launch might embrace non-GAAP measures. Sify’s outcomes for the 12 months are in accordance to the Worldwide Monetary Reporting Requirements, or IFRS, and can differ considerably from the GAAP bulletins made in earlier years. A presentation of probably the most instantly comparable monetary measures calculated and offered in accordance with GAAP and a reconciliation of such non-GAAP measures and of the variations between such non-GAAP measures and probably the most comparable monetary measures calculated and offered in accordance with GAAP might be made obtainable on our web site.

Earlier than we proceed, I want to level out that sure statements contained within the earnings launch and on this convention name are forward-looking statements fairly than historic details, and subsequently are topic to dangers and uncertainties that might trigger precise outcomes to vary materially from these described. With respect to such forward-looking statements, the corporate seeks protections afforded by the Non-public Securities Litigation Reform Act of 1995.

These dangers embrace quite a lot of elements, together with aggressive developments and danger elements listed from time-to-time within the firm’s SEC experiences and public releases. These lists are meant to establish sure principal elements that might trigger precise outcomes to vary materially from these described within the forward-looking statements, however should not meant to symbolize a whole record of all dangers and uncertainties inherent to the corporate’s enterprise.

I’d now flip the desk over to Mr. Raju Vegesna, Chairman of Sify Applied sciences. Chairman?

Raju Vegesna

Thanks, Praveen. Good morning, and thanks for becoming a member of us on the decision. India’s potential continues to draw the eye of the worldwide enterprise leaders. Their confidence displays positively on our enterprise surroundings, attracting investments and fostering partnerships. I’m dedicated to fostering this progress, guaranteeing that India continues to thrive on the world stage and Sify has a central position to play.

Let me carry Kamal, our CEO, to increase on among the enterprise highlights for the previous 12 months. Kamal?

Kamal Nath

Yeah. Thanks, Raju. As enterprises advance their digital transformation and digitalization objectives, they’re strategically realigning their digital structure throughout purposes, hybrid cloud, community safety and edge environments. Buyer expertise, enterprise continuity, cybersecurity, utility modernization and synthetic intelligence enablement are the pivotal catalyst driving this recalibration.

Our sturdy infrastructure investments and complete providers portfolio are structured to exactly antagonistic buyer targets. Concurrently, we’re sustaining proactive engagement with our shoppers, figuring out their current necessities, and customizing our choices to align with their evolving wants.

Let me now increase on the enterprise highlights for the 12 months. Income from information middle colocation providers for FY ’23-‘24 grew by 9% over last year. Revenue from digital services for FY ’23-‘24 decreased by 1% over last year. Revenue from network centric services for FY ’23-‘24 grew by 10% over last year. The revenue speed between the businesses for the year was data center colocation services at 31%, digital services at 28%, and network services at 41%.

As of March 31, 2024, Sify provide services via 1,033 fiber nodes across the country, a 16% increase respectively over the same quarter last year. As of March 31, 2024, Sify has deployed 7,835 contracted LDR and service points across the country. At close of financial year, Sify has invested a cumulative of $7.22 million in startups in the Silicon Valley area, as part of our corporate venture capital initiative. A detailed list of our key wins is recorded in our press release, now live on our website.

Let me bring in Vijay, our Executive Director and Group CFO, to elaborate on the financial highlights for the year. Vijay?

M. P. Vijay Kumar

Yeah. Thank you, Kamal. Good morning, everyone. Let me briefly present the financial performance for the financial year 2023-‘24. Revenue was INR35,634 million an increase of 7% over last year. EBITDA was INR6,756 million, an increase of 7% over last financial year. Profit before tax was INR232 million, a decrease of 77% over the last year. Profit after tax was INR49 million, a decrease of 93% over last year.

Capital expenditure for the year was INR12,377 million. Our three businesses have unlocked tailored growth avenues, attracted targeted investments and fostered valuable partnerships. Our investment philosophy encompasses expanding data center presence to new locations for sustained growth, increasing capacity at existing facilities to meet the foreseeable demand and fortifying our network infrastructure and cloud interconnectivity.

Simultaneously, we are prioritizing the expansion of our people, capabilities and competencies, equipping them with essential skills, tools and processes to drive innovation and efficiency. All the while, we remain steadfast in our commitment to cost effectiveness and fiscal prudence. Cash balance at the end of the year was INR5,835 million.

I will now hand over to our Chairman for his closing remarks. Chairman?

Raju Vegesna

Thank you, everyone. And as I outlined, India is continuously growing and we are in the midst of this progress and we are going to continuously grow. Operator?

Question-and-Answer Session

Operator

Thank you very much. We are now opening the floor for questions. [Operator Instructions] Your first question is coming from Greg Burns of Sidoti and Company. Greg, your line is live.

Greg Burns

Good morning. Could you just talk about the rationale behind the proposed rights offering versus maybe some other form of capital?

Raju Vegesna

As far as the rights offering is concerned, the objective was to finance the expansion of our data centers and also to invest in our Digital Services business growth, considering that we also incidentally are in the 25th year of listing at NASDAQ. It was an opportunity to engage with all the existing shareholders to participate in the next phase of growth. And hence, the rights issue instead of raising any external capital.

Greg Burns

Okay. What is your projected CapEx for this coming fiscal year?

Raju Vegesna

The projected CapEx will be similar to what we have done in the last two years. Last two years, we have done on an average about INR1,400 crores — INR1,400 crores. We will have a similar run rate.

Greg Burns

Okay. And then maybe you could talk about the roadmap of your data center roadmap a little bit. I know the Tower 5 in Mumbai came online, and I think there was a tower in Noida maybe that was coming online in April. Is that online currently and what do you have in the roadmap for fiscal 2025 and ‘26?

Raju Vegesna

Yeah. For the Fiscal 2025, there are two greenfield projects which will go live. One at Noida, which is the National Capital Region, Delhi, another at Chennai. These two facilities will go live. And in the next fiscal, there will be additional capacity, which will come up in Mumbai and in another of the cities which will happen, which we are at the early stages of finalizing our design and plan for the same.

Greg Burns

Okay. Maybe could you quantify — maybe in terms of like added capacity, like what’s your existing capacity now and maybe what that, I guess the roadmap that you just laid out adds?

Raju Vegesna

Yeah. The existing capacity is about 120 megawatt of IT power capacity. And the two new facilities, which are going to go live this year will have a design capacity of 26 megawatt each, but these capacities will be made operational in phases over the next two years.

Greg Burns

Okay. And then maybe we could just — to that idea of like things coming on in phases, I guess the Tower 5 in Mumbai, I guess it’s around 40 megawatts of total capacity. What has been sold or what’s currently operational and how does that get rolled out now that the tower is up and running?

Raju Vegesna

Yeah. So that’s a 38 megawatt facility of which by end of this fiscal March 25, nearly two-third of the capacity will be fully occupied and the rest will get occupied in the following year.

Greg Burns

Okay. And then, maybe we could just focus in on this quarter a little bit. Can you just talk about network services? They were a little bit stronger. The growth there was a little bit stronger than we were looking for. Can you just talk, was there anything unusual about the quarter or is that a good growth rate to or a good number to build off of for our models going forward?

Raju Vegesna

Yeah. The network business performance has been fairly organic. The quarter four was relatively better. But importantly, we continue to expand on our network infrastructure. And similar to data center, we are committed to substantial investments for expanding our network infrastructure, given the fact that edge data centers will come into play in the country and we will continue to invest there.

Greg Burns

Okay. And then the digital services were down a little bit from a year ago. Was there anything in particular of note driving that or not?

Raju Vegesna

The outlook in the market is looking good. Our engagements with the customers are getting deeper. We are continuing to invest in building people’s capability and we should start seeing results in the foreseeable future.

Greg Burns

But within that digital services, were cloud services up and maybe technology integration services down? Was there any — within the category of digital services, what was the mix driving that 1% down?

Raju Vegesna

Yeah. The integration services, the projects are lower than in the past, but the cloud and the network managed services continue to scale.

Greg Burns

Okay. Perfect. And then what is the status of the data privacy law? Has it been — is it being implemented yet or there is still trying to — sorry, go ahead.

Raju Vegesna

No. I didn’t get the query. [Multiple Speakers] Knowledge privateness legislation, okay. So far as information privateness legislation is anxious, it is but to turn into efficient. The legislation has been pronounced, however the guidelines are but to be issued. Most probably after the brand new authorities is shaped, we must always see that legislation turning into efficient.

Greg Burns

Okay. And with that timeline in thoughts, are you seeing a rise in inbound exercise or pipeline exercise or have you ever seen any influence from that legislation on your small business but?

Raju Vegesna

No, I feel India information middle progress and community progress is impartial of the information privateness legislation. I do not assume localization per se is one thing which is driving demand. I feel we now have greater driver of demand within the type of AI and ML actions. I feel these are a lot greater drivers. Other than the digitalization packages of the India Enterprises, I feel these are driving demand a lot stronger. I do not assume regulatory assist goes to make an enormous delta.

Greg Burns

Okay. All proper. Nice.

Raju Vegesna

Thanks.

Operator

Thanks. Thanks very a lot. [Operator Instructions] Okay. I am not seeing any additional questions come into queue. I will now hand again over to the administration crew for any closing feedback.

Raju Vegesna

Thanks. Thanks for becoming a member of us and repeatedly interacting with the remainder of the 12 months. Thanks.

Operator

Thanks very a lot, all people. Thanks. This does conclude at the moment’s convention name. It’s possible you’ll disconnect your telephone strains presently and have a beautiful day. Thanks in your participation. Thanks everybody.