{"id":13275,"date":"2021-02-03T10:40:10","date_gmt":"2021-02-03T10:40:10","guid":{"rendered":"https:\/\/www.sifytechnologies.com\/investors\/?page_id=13275"},"modified":"2021-02-03T10:40:10","modified_gmt":"2021-02-03T10:40:10","slug":"sify-meeting-note-for-1-28-2021","status":"publish","type":"page","link":"http:\/\/www.sifytechnologies.com\/investors\/reports\/analyst-reports\/sify-meeting-note-for-1-28-2021\/","title":{"rendered":"SIFY Meeting Note for 1\/28\/2021"},"content":{"rendered":"

SIFY Meeting Note for 1\/28\/2021<\/h2>\nRaise Target To $5 (From $4)<\/span><\/strong>\n3Q: F21 Revenue, EBITDA Beat Our Forecasts As Demand For Sify\u2019s Data Center Centric Services Remains Strong\n\nHighlights:<\/strong>\n\nSify is managing its liquidity well and generated strong cash flow in 2Q: F21, ending the quarter with cash of $68 million, up from $65 million at the end of 2Q: F21, and debt of $138 so the company remains lightly leveraged.\n\nSIFY stock trades at just 6x our new F2023 EBITDA estimate, a significant discount to the peer group range of 8x-12x estimated 12-month forward EBITDA.\n\nWe raise our price target to $5 (from $4), which is based on 12x our F2023 EBITDA estimate of $91.5 million, less projected net debt of $127 million.\u00a0 The $5 price target implies 42x our new F2023 EPS estimate of $0.12.\n\nGiven the company\u2019s growth potential and modest leverage of 1.0x net debt-to-TTM EBITDA, we maintain our Moderately Risky rating.\n\nDemand for Sify\u2019s Data Center Centric services remains strong as 3Q: F21 revenue topped our forecast.\u00a0 The pandemic is still pressuring some areas of Sify\u2019s business, mainly its Network and Application integration services, but growth in the company\u2019s Data Center Centric services has remained strong through the pandemic and more than offset declines in these other two segments. Revenue growth accelerated in 3Q: F21 relative to the 1.6% growth Sify delivered in 2Q: F21, with sales rising 7% to $96.9.\u00a0 This topped our $92.4 million estimates. The pandemic is accelerating the digital transformation and cloud adoption of businesses in India which in turn is driving demand for Sify\u2019s services as was evident this quarter where revenue from Data Center Centric IT services increased 21%.\u00a0 By business line, Sify\u2019s Data Center, Cloud, and Technology Integration Services grew 46%, 26%, and 13% respectively.\u00a0 While Cloud and Technology Integration grew in line with our expectations, Data Center revenue growth was stronger than the 30% we projected.\u00a0 Given the strong demand, Sify will continue to add data center capacity this year, so the outlook for the continued growth of its Data Center and Cloud services remains strong.\u00a0 The two areas of Sify\u2019s business that continue to be pressured by the pandemic are the Network Services and Applications Integration Services segments, which declined 5% and 21% respectively; both were in line with our expectations.\n\nEBITDA in 3Q: F21 also came in above our expectations.\u00a0 The gross margin widened 80 basis points to 37.5% owing to a favorable revenue mix, with higher-margin Data Center and Cloud Services making up a greater percentage of revenue.\u00a0 Management is also effectively managing spending during the pandemic, with operating expenses staying roughly flat from a year ago.\u00a0 As a result, EBITDA increased 17% to $19.9 million, topping our $18.3 million estimates.\u00a0 Net income increased 56%, aided by a reduction in interest expense. As a result, EPS increased to $0.02 from $0.01 a year ago, but this was still in line with our estimate due mainly to rounding.\n\nValuation<\/strong>\n\nWe raise our price target to $5 (from $4) on SIFY shares.\n\nWhile the pandemic is curbing economic growth in the near term, it does not change the long-term digital transformation of India\u2019s economy.\u00a0 We think Sify will likely be a primary beneficiary of this transformation.\u00a0 With the stock trading at 6.0x our projections on an F2023 EV\/EBITDA basis, SIFY is valued at a significant discount to peers in the India Telecom and application and technology integration markets, that trade in a range of 8x-12x EV\/EBITDA.\u00a0 Given Sify\u2019s growth potential, we think the stock deserves to trade at the high-end of the peer group range.\u00a0 We thus raise our price target to $5 (from $4), based on an unchanged 12x our F2023 EBITDA estimate of $91.5 million, less projected net debt of $127 million, to yield $970 million, or $5.40 on a per-share basis.\u00a0 Given the company\u2019s growth potential and modest leverage, we maintain a Moderately Risky rating.\n\nGregory Burns (212) 894-3317\n\nSidoti & Company, LLC\n\nClick here to read the full report<\/a>","protected":false},"excerpt":{"rendered":"

SIFY Meeting Note for 1\/28\/2021 Raise Target To $5 (From $4) 3Q: F21 Revenue, EBITDA Beat Our Forecasts As Demand For Sify\u2019s Data Center Centric Services Remains Strong Highlights: Sify is managing its liquidity well and generated strong cash flow in 2Q: F21, ending the quarter with cash of $68 million, up from $65 million<\/p>\n","protected":false},"author":1,"featured_media":10268,"parent":10416,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"class_list":["post-13275","page","type-page","status-publish","has-post-thumbnail","hentry","page_cat-reports-home"],"_links":{"self":[{"href":"http:\/\/www.sifytechnologies.com\/investors\/wp-json\/wp\/v2\/pages\/13275","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.sifytechnologies.com\/investors\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"http:\/\/www.sifytechnologies.com\/investors\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"http:\/\/www.sifytechnologies.com\/investors\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.sifytechnologies.com\/investors\/wp-json\/wp\/v2\/comments?post=13275"}],"version-history":[{"count":0,"href":"http:\/\/www.sifytechnologies.com\/investors\/wp-json\/wp\/v2\/pages\/13275\/revisions"}],"up":[{"embeddable":true,"href":"http:\/\/www.sifytechnologies.com\/investors\/wp-json\/wp\/v2\/pages\/10416"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/www.sifytechnologies.com\/investors\/wp-json\/wp\/v2\/media\/10268"}],"wp:attachment":[{"href":"http:\/\/www.sifytechnologies.com\/investors\/wp-json\/wp\/v2\/media?parent=13275"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}