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Stock Alert for Sify Technologies Ltd. (SIFY)

Sify Technologies Ltd. (NASDAQ:SIFY) is an integrated Information Communications Technology (ICT) company in India, offering end-to-end solutions with a comprehensive range of products delivered over a common telecom data network infrastructure reaching more than 667 cities and towns in India. A significant part of the Company’s revenue is derived from Corporate Services, which include corporate connectivity, network and communications solutions, security, network management services, enterprise applications and hosting. SIFY is a recognized ISO 9001:2008 certified service provider for network operations, data center operations and customer support, and for provisioning of VPNs, Internet bandwidth, VoIP solutions and integrated security solutions, and ISO / IEC 20000 – 1:2005 and ISO/IEC 27001:2005 certified for Internet Data Center operations. It has also established a credible reputation in the emerging Cloud Computing market and is today regarded as a thought leader in the domain. SIFY has licenses to operate NLD (National Long Distance) and ILD (International Long Distance) services and offers VoIP back haul to long distance subscriber telephony services. The Company is India’s first enterprise managed services provider to launch a Security Operations Center (SOC) to deliver managed security services.

Share Statistics (01-Nov-11)   FY

2009

FY

2010

%

Chg

Q4

2009

Q4

2010

%

Chg

Symbol SIFY Revenue, $INR 6,162.16 6,710.19 8.9% 3,386.45 1,735.04 -48.8%
Current price $4.79 Gross marg. 41.4% 39.0% -5.8% 38.9% 38.0% -2.3%
52wk Range: $1.66-$8.54 Oper. margin 1.8% -3.5%
Avg Vol (3m): 7,166,372 Net margin -14.6% 0.3% -102.1% -7.6% -5.4% -28.9%
Market Cap. 405.24M              
Shares Outstanding 84.60M EPS, $ -20.55 -6.23 -69.7% -4.08 -1.76 -56.9%

Source: Reuters.com, SEC Filings.

Investment Highlights

Shares of SIFY dropped as much as 29% to $4.46 on Tuesday, snapping a five-day winning streak.  Approximately 7.17 million shares traded hands during the session, as against the 10-day average of 1.47 million.  Over the last 52-weeks, the stock has reached a low of $1.66 and a high of $8.54. The stock is currently trading above its 50-day moving average of $3.93 and above its 200-day moving average of $4.78

Shares in the Indian Internet services provider have gained 40.1% in the last five days; 20.1% in the last month; and 160.3% year-to-dated.

The Company last week announced its financial results for the second quarter ended September 30, 2011, showing a lower net loss coupled with an increase in revenues.

SIFY reported revenues of $37.10 million, up from $35.08 million reported in the corresponding period in 2010. Revenue from Enterprise services rose by 7.5% and from Software services by 22% over the corresponding quarter in the previous year.

EBITDA for the quarter rose to $3.33 million, as compared to $1.10 million in the corresponding period last year.

For the quarter, the Company saw a net loss of $1.39 million, compared to a net loss of $2.74 million a year ago.

Commenting on the Company’s latest quarterly results, Raju Vegesna, chairman and manager director of SIFY, said the Company’s Enterprise business continues to gain traction, supported by domestic growth in the corporate segment and a renewed spending environment. On the services front, Vegesna said the focus on Network, IT and software services as core offerings is beginning to show results.

Looking forward, SIFY remains very positive on the outlook for ICT services in India, which is supported by favorable regulatory trends. The proposal to allow Voice-over-IP domestically in India also provides new opportunities for data-focused operators such as SIFY, Vegesna said.

SIFY remains operating cash flow positive, with operating expenses contained within its operating cash flows for yet another quarter, stated MP Vijay Kumar, CFO of SIFY.  While the Company’s new capital expenditures continue to exceed operating cash flows, as it continues to invest for future growth, it is important to note that its capacity utilization has improved during the quarter, he said.

Source: http://sifycorp.com/scripts/content.asp?pressid=998047639

Financial Strength (01-Nov-2011)

Company

Industry

Sector

S&P 500

Quick Ratio (MRQ) 2.12 2.01 0.64
Current Ratio (MRQ) 2.99 2.74 0.98
LT Debt to Equity (MRQ) 11.77 13.46 98.98
Total Debt to Equity (MRQ) 17.89 22.15 139.18
Interest Coverage (TTM) 0.96 1.36 20.29

Source: Reuters.com, SEC Filings.

Technical Analysis

 

Source: http://stockcharts.com

SIFY is presently near its upper Bollinger Band. This suggests that it is at a high level relative to recent action.

The MACD for SIFY currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9-day moving average. Second, the MACD is above 0 which implies that the underlying moving averages are trending higher.

Comparative Analysis

Company Name Ticker Price per Mrkt. Cap. P/E P/S
Nov01-2011 symbol Share, $ $ Mn 2011 2012 2011 2012
Mahanagar Telephone Nigam Ltd. MTE 1.26 396.90M n/a n/a 0.48 0.54
Tata Communications Ltd. TCL 7.66 1.09B n/a n/a 0.35 0.33
Internet Services Providers Median       15.97 n/a 0.95 n/a
Sify Technologies Ltd. SIFY 4.79 405.24M n/a n/a n/a n/a

Source: Thomson Financial

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