Sify Technologies has reported revenue of Rs 5,891 million in the third quarter (Q3) of financial year (FY) 2019-20, an increase of 3 per cent over the same quarter last year.

Further, earnings before interest, tax, depreciation and amortisation (EBITDA) for the quarter was Rs 1,103 million, an increase of 40 per cent over the same quarter last year. Considering IFRS16 leases adoption from April 1, 2019, the increase is 23 per cent on comparable basis. Profit before tax for the quarter was Rs 249 million, a decrease of 20 per cent over the same quarter last year.

Furthermore, the profit after tax (PAT)  for the quarter was Rs 164 million, a decrease of 47  per cent over the same quarter in 2018-19, primarily due to tax expense of Rs 85 million during the current quarter. Capex during the quarter was Rs 1,089 million and cash balance at the end of the quarter was Rs 2,204 million.

Commenting on the development, Raju Vegesna, chairman, Sify Technologies said, “Most enterprises are viewing the current environment as an opportunity to reskill and reengineer their people and processes and be ready for the Digital economy of tomorrow. This drives both increased consumption of Sify’s infrastructure offerings, as well as increasing utilisation of our digital transformation skills and services”.

Meanwhile, Kamal Nath, CEO, Sify Technologies said, “Our vision and strategy to align and lead with hybrid and multi-cloud models, supported by our relevant infrastructure investments, has put us strongly in the Digital transformation pursuit of customers. Our cloud-aligned network and security transformation services are other areas which are not only supporting the customers’ cloud adoption journey but have also opened up growth areas for us.  We would continue to drive and strengthen this motion going forward”.

Further, M P Vijay Kumar, CFO, Sify Technologies said, “We continue to invest with prudence on our capacity expansion, in particular data centres and in people for enhancing our scale of managed services. While revenue and EBITDA have grown, the net profit has been tempered by the depreciation on new capacity and related interest expense. The tax expense is due to the Company being subject to income tax as the benefit of past losses has been utilised in full until last year. Our cash balance at the end of the quarter stands at Rs 2204 million”.

Business highlights

  • Revenue from Data centre centric IT services stayed flat against the same quarter last year.
  • Segment-wise, revenue from Data centre services, Cloud and Managed Services and Applications Integration Services grew by 15 per cent, 7 per cent and 12 per cent respectively, while revenue from Technology integration services fell by 24 per cent .
  • Revenue from Network centric services grew by 8 per cent over the same quarter last year.
  • Segment-wise, revenue from Data connectivity services grew 12 per cent while revenue from the Voice business fell by 2 per cent.

Growth Drivers

The primary growth driver in the market continues to be cloud adoption, led by digital initiatives and transformation. This trend is triggering movement of workloads from on-premise Data centres to hyperscale Public Cloud and hosted Private Cloud in varied degrees, based on the digital objectives of the Enterprises. This results in transformation of the traditional network architecture, and transformation at the edge which connects the end user. The need for digital services like analytics, data lakes, IoT, etc are shifting the balance to adoption of hyperscale Public Cloud vs Private Cloud. Collectively, these trends are generating opportunities for full scale Cloud, DC and Network service providers with digital services skills.

Key Wins

Highlights of Sify’s major wins in the quarter include:

  • Customers choosing Sify for migration of their on-premise data centre to multi-cloud platforms like Cloudinfinit, AWS and Azure. They also entrusted Sify with management and security.
  • Customers choosing Sify as their DC Hosting partner as they embrace hybrid cloud strategy.
  • Customers choosing Sify as their Digital services partner.
  • Customers choosing Sify as their Network Transformation and Management partner as they migrate to Cloud-ready network.

A consolidated summary of the key highlights during the quarter is noted below:

Data Center Centric IT Services highlights include:

  • 6 customers contracted to have their workload migrated from their on-premise DC to multi-cloud, including one of India’s largest retail chain and clients from Financial services, Supply chain and logistics, Metallurgy, Heavy Engineering and Industrial Chemicals.
  • 4 customers contracted for greenfield Cloud implementation from verticals such as the Retail merchandising, Power, Corporate Registry, Logistics and a State Government.
  • 7 new customers contracted for services on Public Cloud and Cloudinfinit platform.
  • 6 customers, including one of India’s large private banks, moved their IT infrastructure from competitor Data Center to Sify DC, while 3 customers migrated from their on-premise Data Center to Sify DC. These were across Retail, Banking, IoT services, Financial services, Food processing and Cloud Telephony.
  • 2 public sector banks contracted Sify to commission Private cloud at their Data Centers.
  • 2 clients from Financial services and Logistics, contracted Sify to modernise their Data centre.
  • 4 clients including a retail major, a diversified multinational and a power sector PSU contracted for the design, supply and deployment of their on-premise DC.
  • 12 customers have contracted Sify for Cloud managed services.
  • A government department contracted for a large Online Assessment project.

Telecom Centric Services added 49 new customers in the quarter. These include…

  • A media major, an international automobile brand, logistics player and a fashion label contracted with Sify for Cloud interconnections.
  • Multiple banks, an NBFC, an Insurance PSU and a Pharma major contracted with Sify for a complete network build.
  • An international payment services company, a paint manufacturer and an energy major contracted for managed and secure SD-WAN services.