CHENNAI, India - Sify Technologies Ltd. (NASDAQ:SIFY), a prominent ICT solutions and services provider in India, has begun its rights offering, a strategic move to raise capital for business expansion. The offering grants existing shareholders and American Depositary Share (ADS) holders the ability to purchase additional shares or ADSs, respectively.
Holders of Sify's equity shares and ADSs as of the record date, May 31, 2024, are eligible to participate. Equity shareholders are entitled to 1.36364 rights per share, with each right allowing the purchase of one new equity share at ₹10. Similarly, ADS holders will receive 1.36364 ADS rights for each ADS, with each right enabling the acquisition of one new ADS at the price of $0.14, inclusive of a $0.02 depositary fee.
This offering also includes an over-subscription privilege, allowing participants who fully exercise their rights to purchase additional shares or ADSs that remain unsubscribed after the offering's conclusion. The allocation of these additional securities will be subject to availability and proration among over-subscribing rights holders.
The company has revised the terms from its initial announcement, now providing a one-to-one subscription ratio for rights holders, compared to the previously stated ratio of 0.73 rights for one new share or ADS.
If fully subscribed, Sify anticipates gross proceeds of around $30 million before expenses. The net proceeds are earmarked for the development of network-centric, data center, and digital services, as well as for general corporate purposes.
This news is based on a press release statement from Sify Technologies Ltd.
In other recent news, Sify Technologies reported mixed financial results for the fiscal year 2023-2024. The company's overall revenue increased by 7% to INR 35,634 million, with data center colocation services and network-centric services revenue growing by 9% and 10% respectively. However, both profit before tax and profit after tax saw a steep decline of 77% and 93% over the previous year.
Amidst these developments, Sify continued to invest in infrastructure, expanding with 1,033 fiber nodes and 7,835 contracted LDR and service points across India. The company also invested $7.22 million in Silicon Valley startups as part of its venture capital initiative.
Looking forward, Sify plans to continue investing in data center and network infrastructure expansion, with two new greenfield data center projects in Noida and Chennai set to go live in fiscal 2025.
InvestingPro Insights
As Sify Technologies Ltd. embarks on its rights offering to fund expansion and enhance its portfolio of network-centric, data center, and digital services, investors are considering the company's financial health and market performance. Here are some curated insights from InvestingPro that may help shareholders and potential investors gauge the opportunity:
Sify's market capitalization stands at a modest $163.2 million, reflecting its position in the market. Despite a challenging environment, the company has managed to maintain a revenue growth of 6.68% over the last twelve months as of Q4 2024. This growth is indicative of Sify's potential to capitalize on the increasing demand for ICT solutions in India.
However, it's important to note that Sify operates with a significant debt burden, which is a crucial factor for investors to consider, especially when evaluating the company's long-term financial stability. Moreover, the stock has experienced high volatility, with price movements reflecting a 52-week low and significant declines over various periods, including a 19.07% drop over the last week and a 52.27% decrease year-to-date as of the same period in 2024.
Investors looking at earnings potential will find that Sify's P/E ratio, as of the last twelve months of Q4 2024, is 278.28, which is high and suggests a premium valuation. This is supported by an InvestingPro Tip indicating that the stock is trading at a high earnings multiple. Additionally, analysts predict that the company will be profitable this year, which could be a silver lining for those considering long-term prospects.
For a more comprehensive analysis, investors can explore additional InvestingPro Tips, which provide insights on Sify's cash flow situation, stock performance, and industry standing. There are 16 additional tips available on InvestingPro, offering a deeper dive into the company's financials and market behavior. To access these insights, visit InvestingPro and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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