Sify’s Data Centre Capacity Is Heading to 300 MW. Profit Was Rs 40 Million.
Revenue grew 31 per cent and EBITDA 33. Capital expenditure was 2.7 times EBITDA and net debt rose 58 per cent, which is what a buildout looks like before it pays.
Sify Technologies reported second-quarter revenue of 13,798 million rupees, up 31 per cent, and adjusted EBITDA of 3,131 million rupees, up 33 per cent. It also reported profit for the quarter of 40 million rupees, which is three-tenths of one per cent of revenue. In the same quarter it spent 8,573 million rupees on capital expenditure, and its net debt rose to 45,331 million rupees from 28,736 million a year earlier. Those four numbers, read together, describe a company converting its income statement into concrete and steel as fast as it can borrow.
That is not a criticism. It is what building data centre capacity in India looks like in 2026, and the question worth asking is not whether Sify is spending but whether the spending earns its cost of capital before the debt matures.
What the numbers say
The operating performance is genuinely strong. Revenue rose 31 per cent year on year and EBITDA 33 per cent, with operating profit rising to 1,184 million rupees from 709 million. Digital services turned EBITDA positive for the first time, a milestone management expects to hold as the portfolio shifts toward AI-led work. Network services contributed 43 per cent of revenue, data centre services 37 per cent and digital services 20 per cent.
The balance sheet tells the other half. Borrowing and lease interest rose to 1,142 million rupees from 914 million. Long-term borrowings reached 36,109 million rupees against 26,729 million a year earlier, and short-term borrowings more than doubled to 18,572 million from 7,823 million. Capital expenditure of 8,573 million was 2.7 times quarterly EBITDA. Profit of 40 million compares with a loss of 275 million a year earlier and a profit of 65 million in the preceding quarter, so the line is thin and it moves.
The capacity pipeline
Operational data centre capacity stood at 136 megawatts at 30 September. A subsidiary holds 113 megawatts of contracted capacity scheduled for delivery, of which about 81 megawatts lands in the current financial year, spread across this quarter and the next three. Management puts total design capacity at close to 300 megawatts once it delivers that backlog, and says the land bank across seven cities could support more than a gigawatt.
Two edge data centres are live in Lucknow and Mohali, with two more under construction. The company completed its Hyderabad to Chennai national long-distance corridor and received provisional Department of Telecommunications clearance for two cable landing stations. Its fibre footprint reached 1,264 nodes, up 6 per cent.
What the credit rating shows
The clearest read on the subsidiary comes from CARE Ratings, which rates Sify Infinit Spaces. Its June 2026 note puts operational capacity at about 133 megawatts with absorption around 88 per cent, revenue growth of 23 per cent to 1,761 crore rupees in FY26, and profit before interest, lease rentals, depreciation and tax margins consistently above 40 per cent, at 45.06 per cent in FY26 and 41.32 per cent in the first quarter of FY27. Those are good margins for an infrastructure business.
The note also explains the debt. Net debt to that profit measure was 3.20 times in FY26, and the agency expects it to run at 4.2 to 4.5 times in FY27 because of the capex programme, which it calls likely transient. Planned capex exceeds 7,000 crore rupees across FY27 to FY29 for roughly 200 megawatts more by FY29. Two structural details matter: hyperscaler contracts pass through power costs, which are about 70 per cent of total costs, and one hyperscaler has contracted the entire capacity of the Rabale Towers 6 and 7 campus, which pulled that build forward from March 2029 to March 2027.
Most Informative Part
The customer list, though anonymised, is the most informative part of the release. It shows a global semiconductor company taking its first capacity in India, a global personal computing and cloud company taking a node in a newer facility, a major capacity deal with a global AI cloud compute provider, a consumer electronics multinational taking its first Indian compute, and an American technology conglomerate expanding alongside the country’s largest carrier-neutral internet exchange. Alongside those sit the ordinary movers: a regional bank shifting off its own premises, a trading and distribution firm migrating from a competitor, two banks expanding and one setting up disaster recovery. Read together, the list describes two things happening at once, hyperscalers and AI specialists arriving, and conventional enterprises leaving their own server rooms.
The competitive land grab
The market context explains the urgency. India holds about 20 per cent of the world’s data but only 3 per cent of its data centre capacity, and CARE expects national capacity to more than double from roughly 1.5 gigawatts in 2026 to 4.2 gigawatts by 2028. Everyone is building. NTT DATA has committed 1.5 billion dollars over three years to more than double its Indian capacity by fiscal 2027. CtrlS operates 19 facilities with more than 370 megawatts and targets 4 gigawatts by 2031. Sify’s own pipeline includes a 377-megawatt Mumbai project, 130 megawatts in Chennai and 78 megawatts in Noida.
The subsidiary’s ownership explains part of the financing logic. Kotak Data Center Fund and Kotak Special Situations Fund put in 1,000 crore rupees through compulsory convertible debentures, and Sify Technologies added 247.50 crore between FY22 and FY26. Those instruments converted to equity in FY26, leaving Sify Technologies with 88.45 per cent and the Kotak funds with 11.55 per cent. That is why the chairman can describe the company as adequately capitalised while net debt climbs, and why the listing matters: it is the mechanism by which growth capital arrives without more borrowing.
The pricing claim everything rests on
The investment case depends on one assertion, which the chairman made directly on the earnings call: demand is in far excess of available supply, so there is no pressure on pricing, and pricing and returns are improving. If that holds, the debt is a timing problem rather than a solvency one, because the capacity arriving over the next three quarters already carries contracts struck before construction began.
If it does not hold, the exposure is concentrated. The Rabale commitment is to a single hyperscaler, which is efficient while the contract runs and a concentration risk when it renews. And the whole thesis depends on AI demand persisting at the pace that justified accelerating a build by two years.
The digital services result deserves its own line. The segment reached EBITDA positive for the first time, on 20 per cent of revenue, and management attributes the shift to a portfolio moving toward AI-led work. For a business that has historically been the weakest of the three, breaking even at the operating line while the other two absorb the capital is a meaningful change in mix, and it is the one part of the quarter that improves the quality of earnings rather than the scale of them.
One figure needs resolving
A detail should be settled before anyone quotes these results. The press release states profit for the quarter as 40 million rupees, and two market data services carried that figure. The chief financial officer, reading the same highlights on the earnings call, said 14 million. The difference is small in absolute terms and immaterial to the investment case, but a published profit figure should not differ between the release and the call that discusses it.
The listing deserves a paragraph of its own, because it is the hinge on which the balance sheet turns. Sify Infinit Spaces has filed and the bankers are choosing their moment. The chairman says the delay is not market-related, points to the successful completion of the country’s largest listing as evidence that the market is open, and notes the company is adequately capitalised in the meantime. He also confirms a regulatory deadline: the window runs to the end of January, and beyond that the process restarts. Kotak support stands behind the capex if the offering slips. A successful raise would cut the net debt to profit ratio faster than any quarter of EBITDA growth, which is why the timeline matters more than the quarter’s results.
What to watch
Three markers. The first is delivery: 81 megawatts inside FY27 against a three-quarter schedule is the number that turns contracted capacity into revenue. The second is the Sify Infinit Spaces initial public offering, which the chairman says is delayed by bankers’ timing rather than market conditions, with a regulatory window running to the end of January and Kotak support in reserve. An equity raise would do more for the debt ratios than any quarter of earnings. The third is the profit line once the current capex tranche stops landing.
What it signals
The results mark a stage in India’s AI infrastructure build where the operators with the longest tenure are levering up hardest to stay in the race. Sify has been in Indian data centres since 2000, longer than almost anyone, and it is now borrowing at a pace that would have been unthinkable for it five years ago. That is a rational response to a market doubling in two years. It is also a bet that the demand curve does not bend, and the next four quarters of delivery will say whether it was right.