[Management View]
Revenue for Q1 FY2026 was INR 10,723 million, up 14% YoY. EBITDA increased by 18% YoY to INR 2,111 million. The company remains in a loss-making position due to strategic investments in infrastructure and manpower. Key strategic priorities include expanding data center capacity and transitioning digital services to a recurring revenue model.

[Outlook]
Management expects to see results from their investments in digital IT services within the next 12-18 months. Future plans include further expansion of data center capacity, particularly in Mumbai, and leveraging the pay-per-use colocation model for AI-ready hosting.

[Financial Performance]
Revenue increased by 14% YoY to INR 10,723 million. EBITDA rose by 18% YoY to INR 2,111 million. Loss before tax was INR 322 million, and loss after tax was INR 388 million, impacted by depreciation, interest, and manpower expenses.

[Q&A Highlights]
Question 1: Can you update on the data center capacity added this quarter and expectations for the next twelve months?
Answer: Two greenfield data centers in Delhi and Chennai, each with a design capacity of 26 megawatts, went live. An additional 8.6 megawatts were added this quarter, bringing total operational capacity to 138 megawatts. Two more data centers in Mumbai, each with a design capacity of 52 megawatts, are under construction and expected to go live later this financial year.

Question 2: Can you explain the pay-per-use colocation AI model and its expected returns?
Answer: The pay-per-use colocation model allows clients to bring their own GPUs and use NVIDIA-certified, liquid-cooled data centers on a usage basis. This model is unique and targets global demand for flexible AI-ready hosting. Initial interest has been positive, but specific numbers are not yet available.

Question 3: When might we see more leverage flowing through the business from current investments?
Answer: The network and data center businesses are performing well, while digital IT services are still in an investment phase. Results from these investments are expected to start showing in 12-18 months.

Question 4: What is the current data center capacity and plans for this financial year?
Answer: Current operational capacity is 138 megawatts. Two greenfield data centers with a design capacity of 26 megawatts each have gone live, and additional capacity will be operationalized as customer demand builds.

Question 5: Are there plans for an IPO of the digital services business?
Answer: Various sources of raising capital are being evaluated, and the market will be informed at the right time.

Question 6: Why has the top line for digital services been flat, and what are the plans to turn this segment around?
Answer: The shift from project-based to annuity revenues has led to flat top-line performance. Investments in people and capabilities are ongoing, with improvements expected in 12-18 months.

Question 7: When do you expect EBITDA margins to expand, given the current investments?
Answer: The data center business has an EBITDA margin of close to 45%, while the network business is at 18%. The digital IT services segment is still in progress, and overall margin expansion is expected as this segment gains traction.

[Sentiment Analysis]
Analysts were generally positive but sought clarity on the timeline for returns on investments and the specifics of the new business models. Management maintained a confident and forward-looking tone, emphasizing strategic investments and future growth.

[Quarterly Comparison]
| Metric | Q1 FY2026 | Q1 FY2025 |
|-------------------------|-----------|-----------|
| Revenue (INR million) | 10,723 | 9,405 |
| EBITDA (INR million) | 2,111 | 1,788 |
| Loss Before Tax (INR million) | 322 | 280 |
| Loss After Tax (INR million) | 388 | 340 |

[Risks and Concerns]
Key risks include the ongoing investment phase in digital IT services, which is currently loss-making, and the potential for delays in realizing returns from strategic investments. Competitive developments and regulatory changes also pose risks.

[Final Takeaway]
Sify Technologies Limited reported strong revenue and EBITDA growth for Q1 FY2026, driven by strategic investments in data center capacity and digital services. While the company remains in a loss-making position, management is confident that these investments will yield positive results within the next 12-18 months. The introduction of a unique pay-per-use colocation model for AI-ready hosting and continued expansion of data center capacity position Sify well for future growth.