CHENNAI, India - Sify Technologies Ltd. (NASDAQ:SIFY), an Indian ICT solutions and services provider, has announced a ratio change for its American Depositary Shares (ADSs) effective October 4, 2024. The new ratio will see one ADS represent six equity shares, revising from the previous one-to-one ratio.
This change is akin to a one-for-six reverse ADS split, but it will not affect the proportional equity interests of ADS holders, except where fractional ADSs are concerned. No adjustments will be made to the company's equity shares.
On the effective date, holders of certificated ADSs must surrender them to Citibank, N.A., the depositary bank, to receive new ADSs. Those with uncertificated ADSs will have their holdings automatically exchanged and do not need to take any action.
Fractional new ADSs will not be issued. Instead, fractional entitlements will be sold, and the net proceeds will be distributed to the relevant ADS holders after deductions as per the deposit agreement with the depositary.
While the ADS Ratio Change is expected to proportionally increase the ADS price, Sify has stated there is no assurance that the post-change ADS price will be equal to or greater than six times the pre-change price.
Sify Technologies, listed on the NASDAQ Capital Market under the symbol "SIFY" with a new CUSIP of 82655M206, is recognized as a key player in India's ICT sector. The company boasts a comprehensive portfolio of cloud-based solutions, extensive data centers, and a robust MPLS network. It serves over 10,000 businesses across various verticals in India and maintains an international presence in North America, the UK, and Singapore.
The information in this article is based on a press release statement from Sify Technologies Limited.
In other recent news, Sify Technologies has seen significant developments. The company announced a change in the ratio of its American Depositary Shares (ADSs) to equity shares, with one ADS set to represent six equity shares, effective as of October 4, 2024. This shift, equivalent to a one-for-six reverse ADS split, doesn't affect the proportional equity interests of ADS holders.
Sify Technologies also reported a 10% revenue increase for Q1 FY24-25, reaching INR 9,421 million, despite a loss before and after tax of INR 46 million and INR 105 million, respectively. The company's EBITDA rose by 3%, totaling INR 1,784 million.
In other leadership changes, the company announced the appointment of Mr. C R Srinivasan as the CEO of Sify Digital Services Limited, a fully owned subsidiary. Sify Technologies is also facing potential delisting from Nasdaq due to non-compliance with the minimum bid price requirement and has until January 15, 2025, to regain compliance.
Sify is expanding its infrastructure, having commissioned a 6.5 megawatt capacity in Mumbai and added 1,055 fiber nodes to its network. In its digital services segment, Sify is transitioning from project-based to annuity-based revenue. These are among the recent developments at the company.
InvestingPro Insights
As Sify Technologies Ltd. (NASDAQ:SIFY) implements its ADS ratio change, investors should consider some key financial metrics and insights from InvestingPro. The company's market capitalization stands at a modest $66 million USD, reflecting its current position in the market.
One InvestingPro Tip highlights that Sify operates with a significant debt burden, which could be a factor in the company's decision to adjust its ADS ratio. This move might be aimed at improving its financial structure and market perception.
Another relevant InvestingPro Tip indicates that Sify's net income is expected to grow this year. This positive outlook aligns with the company's strategic moves, including the ADS ratio change, which could potentially attract more investor interest.
It's worth noting that Sify's stock is trading at a low Price / Book multiple of 0.23, according to InvestingPro Data. This valuation metric might suggest that the stock is undervalued relative to its book value, which could be of interest to value-oriented investors considering the upcoming ADS ratio change.
For those seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for Sify Technologies, providing a deeper understanding of the company's financial health and market position.
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