Sify Technologies (SIFY 2.37%), an India-based information technology company, announced its fiscal 2026 first-quarter results on July 18. Revenue rose 14% year over year to 10.723 billion rupees, and EBITDA rose by 18% to 2.111 billion rupees, but the company recorded a loss after taxes of 388 million rupees on an IFRS (International Financial Reporting Standards) basis. The quarter marked the commissioning of two new greenfield data centers and a shift in digital services revenue strategy, with expectations for further operational data center capacity expansion and potential margin improvement within 12 to 18 months.
Data Center Scale-Up and Strategic Capacity Expansion
Total operational data center capacity rose to 138 megawatts (MW) following the addition of 8.6 MW, and new campuses in Delhi and Chennai, each with 26 MW design capacity, were brought online. Two additional Mumbai facilities, each planned for 52 MW, are under construction and expected to go live later this financial year.
"From the operational capacity perspective, about 8.6 megawatts got added in the quarter, taking the total operational capacity built capacity available for sale to 138 megawatts."
— M.P. Vijay Kumar, Executive Director and Group CFO
Rapid capacity scaling, concentrated in hyperscale campuses across major metros, signals aggressive positioning for surging demand in AI workloads and enterprise digitalization -- deepening the company’s data center moat in India’s burgeoning infrastructure market.
AI-Ready Colocation Model as a Differentiator
Three campuses (Mumbai, Chennai, Noida) are now Nvidia-certified for 130 kilowatts per rack of liquid cooling, and Sify Technologies has launched a "bring your own GPU" pay-per-use colocation offering, targeting enterprise AI and global GPU owners seeking flexible deployment in India. This business model, newly introduced and globally marketed, enables clients to rent capacity for specialized AI applications without Sify Technologies holding GPU inventory risk.
"We are the first guy certified by Nvidia liquid cooling for 130 kilowatt per rack. So the way, you know, these data centers are ready to use for a liquid cooling, and now what we are doing, if anybody wants globally, wants to host their GPUs in one of these facilities, we are offering Kolo as a per usage model. ... So we just started, and we are getting some interest. Global presence. Global requirements. To host here."
— Raju Vegesna, Chairman
Deliberate Digital Services Shift Toward Annuity Revenue
The digital services segment’s revenue was flat year over year and contributed 22% to total revenue, reflecting a three-year pivot from one-time projects to recurring service contracts, which is presently compressing segment margins amid ongoing investment in talent. Management confirmed this segment will not drive overall growth in the near term, but said it expects profitability improvements to be visible within 12 to 18 months.
"The reason for the top line to be flat is a change in the model where there is a focus more on annuity revenues versus project-based revenues. So earlier, the share of project-based revenues used to be high. We have been gradually moving to recurring or annuity services business. So we'll continue to build our annuity business. And as far as the losses are concerned, there are functions of the investment we are making in people. We started this journey about three years back. And we continue to build our capabilities to be relevant for the India IT services market, about which we are very confident about India enterprises outsourcing their IT to companies like us."
— M.P. Vijay Kumar, Executive Director and Group CFO
The transition phase is dampening group profitability, with losses expected to shrink only gradually as these annuity contracts accumulate.
Looking Ahead
Management expects to begin seeing results from recent data center and digital services investments within 12 to 18 months, supported by continued capital expenditure and capacity build-outs. No explicit guidance was provided for revenue or margin targets, though leadership described double-digit growth for fiscal 2026 as a "wish list" item. The board is evaluating capital-raising avenues, including a potential digital platform IPO, but concrete fundraising or monetization plans remain unannounced.
