Indian digital infrastructure and ICT services firm Sify Technologies reported an 11% year-on-year increase in revenue in the third quarter of FY 2025–26, supported by growth in data center and network services, while continued investments in AI-ready infrastructure kept net profits under pressure.
Growth with a Purpose
The growth reflects steady enterprise demand across connectivity, hosting, and cloud services, even as technology spending remains selective in parts of the market.
More importantly, operating performance strengthened meaningfully. EBITDA rose 29% year-on-year to INR 2,470 million, indicating improved operating leverage as newer infrastructure assets begin to scale. Gross profit increased to INR 4,644 million from INR 3,766 million in the same quarter last year, supported by higher utilization in data centers and managed services.
At the same time, Sify reported a loss after tax of INR 329 million, compared to a loss of INR 258 million in Q3 FY25. This was largely driven by elevated depreciation and amortisation costs of INR 1,888 million and finance expenses of INR 941 million—both outcomes of sustained capital investments and debt-funded expansion. Management has been clear that these costs reflect deliberate capacity creation rather than operational weakness.
Net debt stood at INR 35,966 million at the end of the quarter, while cash balances were INR 3,627 million. The balance sheet, management reiterated, mirrors Sify’s decision to invest ahead of demand in businesses with long gestation cycles but high strategic relevance.
Data Centers Take Center Stage
Sify’s business mix is increasingly tilting toward infrastructure-heavy services. Data Center Services accounted for 40% of quarterly revenues, overtaking Network Services at 37%, while Digital Services contributed 23%.
Data centers were the standout performer. The segment delivered a result of INR 2,056 million, up from INR 1,740 million a year ago, reinforcing its role as the company’s primary profit engine. Since June 30, 2025, Sify sold an additional 12.16 MW of data center capacity, reflecting strong demand from BFSI, digital payments, and large enterprises migrating from on-premise or third-party facilities.
Network Services continued to provide scale and reach, generating revenues of INR 4,227 million. As of December 31, 2025, Sify operated 1,214 fibre nodes—a 9% year-on-year increase—and had deployed 9,695 SD-WAN service points nationwide, strengthening its position as a key enterprise connectivity provider.
Digital Services, though smaller and currently loss-making at the segment level, plays a strategic role. Cloud, managed services, security, and disaster recovery offerings deepen customer relationships and act as multipliers for network and data center consumption.
AI at the Core
The unifying theme across Sify’s investments is clear: AI readiness. As enterprises and governments intensify their focus on AI, data-driven platforms, and cloud-native applications, the demand for secure, high-performance, and sovereign digital infrastructure is rising rapidly.
Chairman Raju Vegesna captured this shift succinctly, noting that Indian IT is entering a new phase—one defined not merely by scale, but by leadership in digital infrastructure, cloud, and AI-led innovation. Sify’s response has been to double down on hyperscale data centers, resilient networks, and platforms designed to support GPU-intensive and AI workloads.
A notable highlight during the quarter was a major digital payments umbrella organization signing up to modernize and expand capacity using liquid-cooling solutions for GPUs. This engagement signals a move beyond traditional co-location toward infrastructure purpose-built for AI and high-density compute—an area where demand is still nascent but expected to scale rapidly.
Customer Wins Validate the Strategy
Sify’s customer engagements during the quarter underline how this strategy is translating into real-world adoption. In Network Services, India’s largest stock exchange selected Sify for cloud interconnection to support capital market participants, while the country’s largest private domestic airport operator signed up for WAN services for a new international airport.
In Data Center Services, some of India’s largest broking firms and financial services institutions migrated workloads from competitor facilities or on-premise environments to Sify’s data centers. Government-linked financial entities and multinational technology companies also expanded capacity, reflecting trust in Sify’s reliability and scale.
Digital Services saw traction across greenfield cloud implementations, managed services, security operations centers, and hyperscaler enablement. Customers ranged from central and state government bodies to insurance firms, healthcare majors, and digital payments companies—underscoring the breadth of Sify’s enterprise footprint.
Investing Ahead of the Curve
Capital expenditure during the quarter stood at INR 3,452 million, primarily directed toward expanding data center capacity, strengthening network infrastructure, and enhancing digital platforms. Group CFO M P Vijay Kumar emphasized that capital allocation continues to follow a disciplined framework, balancing fiscal prudence with the need to stay future-ready.
These investments, management believes, are essential to capturing long-term value as India’s AI, cloud, and digital public infrastructure ecosystems mature.
The Long View
Sify’s Q3 FY26 results reflect a familiar but intentional trade-off. Near-term profitability remains constrained by high depreciation and interest costs, but the underlying business shows clear momentum—rising revenues, expanding EBITDA, and growing demand for AI-ready infrastructure.
As India accelerates its adoption of AI, cloud, and data-intensive platforms across enterprises and government, Sify is positioning itself not just as a service provider, but as a backbone of the country’s digital infrastructure. For stakeholders, the message is clear: this is a long-term play, where patience today is aimed at relevance and scale in the AI-driven decade ahead.
