Executive Summary
Sify Technologies reported QQ2 2026 revenue of INR 10.533 billion, up 3% year-over-year per management commentary, with EBITDA of INR 2.361 billion and an operating margin of 6.7%. While EBITDA growth (+20% YoY) reflects ongoing efficiency and scale initiatives in the Network Services and Data Center segments, the company posted a net loss of INR 275 million for the quarter, driven by continued investments in digital services and data center capacity expansion. Management reiterated a deliberate, long-horizon strategy to build future-ready capabilities across three core platforms (Network Centric Services, Data Center Services, and Digital Services), with a strong emphasis on AI-enabled, hyperscale data center growth and edge computing in India.
Key strategic themes discussed on the earnings call include: (1) a robust data center expansion program supported by a design capacity of ~188 MW (with ~130 MW already built) and a pipeline for multiple greenfield projects; (2) a structured IPO path for Infinite Spaces (data center stack) via a holding company, with Kotak's debenture conversion and a plan to maintain significant parent equity, signaling a capital-raising catalyst to meet rising capacity demand; (3) margin dynamics in Network Services being structurally challenged by early-stage AI infrastructure investments, with management forecasting a return to 20%+ margins as utilization and AI-related deployments scale. Investors should monitor the progression of data center monetization, incremental margins from network investments, and the execution of the Infinite Spaces IPO.
Overall, Sify remains positioned to benefit from India’s AI-led digital infrastructure expansion, but near-term profitability is pressured by high capital expenditure and strategic investments in growth initiatives. The stock-specific catalysts include improved data center project IRRs, edge data center deployments, and regulatory/structural milestones around the Infinite Spaces offering.
Key Performance Indicators
QoQ: 29.31% | YoY:-161.90%
QoQ: 17.78% | YoY:-29.82%
Key Insights
Revenue: INR 10,533 million; YoY gain: +3% (per earnings call), QoQ: -1.77%
Gross Profit: INR 4,239 million; Gross Margin: 40.2%
EBITDA: INR 2,361 million; EBITDA Margin: 22.4%
Operating Income: INR 709 million; Operating Margin: 6.7%
Net Income: INR -275 million; Net Margin: -2.61%
EPS (Diluted): INR -4.44; Weighted Avg Shares: 62.19 million
Interest Expense: INR 899 million; Depreciation & Amortization: INR 1,740 million
Capex (quarter): INR 3,064 million; Cash balance: INR 4,149 million
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Financial Highlights
Revenue: INR 10,533 million; YoY gain: +3% (per earnings call), QoQ: -1.77%
Gross Profit: INR 4,239 million; Gross Margin: 40.2%
EBITDA: INR 2,361 million; EBITDA Margin: 22.4%
Operating Income: INR 709 million; Operating Margin: 6.7%
Net Income: INR -275 million; Net Margin: -2.61%
EPS (Diluted): INR -4.44; Weighted Avg Shares: 62.19 million
Interest Expense: INR 899 million; Depreciation & Amortization: INR 1,740 million
Capex (quarter): INR 3,064 million; Cash balance: INR 4,149 million
Tax: INR 81 million expense; Income Before Tax: INR -194 million
Net Debt / Liquidity: Cash balance of INR 4.149 billion; fund deployment focused on data center/buildout and network expansion.
Operational metrics cited by management include: 41% revenue from Network Services, 13% from Data Center Services, 20% from Digital Services for the quarter; 1,196 fiber nodes; 9,992 contracted SDWAN service points; 3 MW of new data center capacity sold during the quarter.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
10.53B |
11.80% |
-1.77% |
| Gross Profit |
4.24B |
22.51% |
2.17% |
| Operating Income |
709.00M |
25.27% |
32.03% |
| Net Income |
-275.00M |
-161.90% |
29.31% |
| EPS |
-4.44 |
-29.82% |
17.78% |
Management Commentary
Management emphasized AI-driven growth and a focus on India’s digital infrastructure expansion. Key remarks include:
- Chairman Raju Vegesna: India is becoming the next hub of digital infrastructure, driven by cloud adoption, AI integration, and data center expansion. This underpins Sify’s strategy to invest in hyperscale data centers and AI-enabled platforms.
- Group CFO M. P. Vijay Kumar: The company is pursuing fiscal discipline while investing for long-term growth; network and data center expansions are ongoing, and IT services remain an investment phase to capture future opportunities. The revenue mix for QQ2 2026 was 41% Network Services, 13% Data Center Services, and 20% Digital Services.
- On data center economics, Kumar noted IRRs north of 20% historically on projects, and that the 3 MW deal was a small enterprise contract within a larger hyperscale/enterprise mix (2/3 vs 1/3).
- Edge computing and tier-2/3 city expansion were highlighted as a strategic frontier, with plans to deploy 10–12 new edge sites in growth markets.
- Infinite Spaces IPO: The data center datacenter-asset ecosystem is currently being advanced via a holding company structure with a DRHP filed; Kotak debentures to convert to Infinite Spaces equity; Sify intends to retain a substantial stake to support future value realization.
- Digital Services commentary: The segment has faced margin erosion due to a shift toward service-based IT consumption post-COVID and ongoing investment in IP and people; management expects monetization to improve as new offerings mature.
As India's digital transformation is entering a decisive phase, redefining its role in the global technology ecosystem. The acceleration in the cloud adoption, AI integration and data center expansion underscores India emerges as the next hub of digital infrastructure.
— Raju Vegesna, Chairman
The tailwinds for the data center, colocation industry growth is very strong. And it is important to have access to capital. And the listing will help us to continuously access capital to meet the demand forecast.
— M. P. Vijay Kumar, Executive Director and Group CFO
Forward Guidance
Catalysts and outlook:
- Data Center expansion remains the primary growth lever. With 188 MW of design capacity (130 MW built) and a greenfield project pipeline, management expects continued healthy project economics, with IRRs north of 20% on typical transactions. The company plans to expand edge data centers in Tier 2/3 cities, reinforcing the network-and-colocation value proposition. A successful Infinite Spaces IPO wouldunlock value realization and provide a long-term equity runway for expansion.
- Margin progression: Management characterized network services margin as structurally suppressed by upfront AI-network investments; they expect margins to trend higher as capacity comes online and utilization improves, targeting sustained 20%+ margins in the medium term. The Digital Services segment is undergoing a strategic redesign; management indicated that monetization would improve as the investments in IP and people begin to bear fruit over the ensuing quarters.
- Balance sheet: Capex of INR 3.064 billion in QQ2, alongside a robust cash position (INR 4.149 billion) supports continued investment in data center/buildouts. The roadmap requires ongoing capital discipline and execution cadence to translate capacity into revenue and margin improvements.
- Risks to monitor: execution risk in greenfield deployments, competition in hyperscale data centers, regulatory approvals/timing for Infinite Spaces, potential changes in IT services demand mix, and macroeconomic pressures that could impact capex cycles in India.