Sify(US:SIFY)2019-01-31 19:08Financial Data and Key Metrics Changes - Revenue for the quarter was INR 5,732 million, an increase of 10% over the same quarter last year [12] - EBITDA for the quarter was INR 788 million, an increase of 12% over the same quarter last year [12] - Net profit for the quarter was INR 312 million, an increase of 9% over the same quarter last year [12] - Capital expenditure during the quarter was INR 1,181 million [12] - Cash balance as of the end of the quarter was INR 1,262 million [12] Business Line Data and Key Metrics Changes - Revenue from Data Center centric IT Services grew by 2% over the same quarter last year [10] - Segment-wise, revenue from Data Center Services grew by 34%, Cloud and Managed Services grew by 78%, and Technology Integration Services grew by 113% [10] - Applications Integration Services fell by 70% due to the delivery of a large government contract last year [10] - Revenue from Telecom centric services grew by 18% over the same quarter last year [10] - Segment-wise, revenue from Data and Managed Services grew by 19%, while revenue from the wholesale voice business grew by 14% [10] Market Data and Key Metrics Changes - The Indian IT market is experiencing significant changes in service consumption patterns, driven by start-ups and demand from Tier II and III cities [11] - Enterprises are increasingly relying on automation, AI, Big Data analytics, IoT, and Machine Learning to adapt to demographic challenges [11] Company Strategy and Development Direction - The company aims to build relevant vertical strengths across industries as enterprises focus on their core operations [7] - The government’s digitalization initiatives are expected to drive broader demand for the company's services [7] - The company is expanding its data center business, planning to launch three new data centers in the current quarter and aiming to increase from nine to 17 or 18 data centers in the next four years [28] Management's Comments on Operating Environment and Future Outlook - Management noted a consistent increase in demand from enterprises and government to move workloads to the cloud [9] - The company is seeing positive demand for its "Cloud@Core" service lines and increased engagement across multiple service lines [9] - Management expressed confidence in the growth prospects of cloud and technology integration services, although they do not expect the same growth rates every quarter [34] Other Important Information - The company has a working capital increase attributed to large technology integration services projects currently being executed [16] - The debt balance as of the end of the quarter was about INR 3,609 million, with approximately INR 870 million maturing in the next year [18][19] - The company has uncalled capital of INR 900 million, of which INR 300 million has been called to fund expansion projects [45] Q&A Session Summary Question: What is driving the increase in working capital? - The increase is attributed to large technology integration services projects currently being executed, which will be monetized upon completion [16] Question: What was the debt balance at the end of the quarter? - The debt balance was about INR 3,609 million, with approximately INR 870 million maturing in the next year [18][19] Question: Why did the Applications Integration Services business decline by 70%? - The decline was due to the loss of a significant contract during the renewal cycle, which had been a major revenue source [21][24] Question: Is there a pipeline of opportunities for the Applications Integration Services business? - The business is seeing good run rate momentum, but the decline was primarily due to the loss of one large contract [24] Question: Does the company have enough liquidity to fund its current pace of CapEx? - The company has cash generation and has secured funding for ongoing data center expansion projects, with no immediate need for fresh capital [26] Question: What was the cash flow from operations this quarter? - Cash generation from operations this quarter was about INR 970 million [27] Question: What are the plans for building out data centers? - The company plans to launch three new data centers this quarter and aims to increase from nine to 17 or 18 data centers in the next four years [28] Question: How is the competitiveness of the data center market? - The market is experiencing significant growth, and while there is competition, the company is well-positioned in terms of pricing [32] Question: What drove the strong growth in wholesale voice services? - The growth has been consistent over the last three quarters, with a 14% increase compared to the same quarter last year [47] Question: Why is the company's tax rate zero? - The company has accumulated losses from the past, which, along with new capital additions eligible for accelerated depreciation, have resulted in tax breaks [51]