DEWA: profit up 8.4%, but AED 35.1bn of net debt absorbs the gain

On 30 September DEWA reported results for the third quarter of 2026. Revenue came in at AED 10,874.5mn (+5.4% year on year), net profit at AED 3,912.6mn (+8.4%), and the net margin rose to 36.0% from 35.0%. Growth accelerated from the second quarter, when revenue fell 2.6%, while operating cash flow for the quarter reached AED 6,806.7mn. Our conclusion: fairly valued – EV/EBITDA of 10.1 against its own three-year average of 10.0, a premium of just 1%. Our view: the share is fairly valued; no portal model for this share; EV/EBITDA 10.1 against a 3-year average of 10.0, in line with its history.

Our view: is there upside

Our view in numbers

Key takeaways

— Revenue added 5.4% after a 2.6% decline a quarter earlier – an acceleration, but a modest one

— The net margin rose to 36.0% from 35.0%, and that is the entire margin gain

— Operating cash flow of AED 6,806.7mn covered capital expenditure almost threefold

— Net debt rose from AED 29.0bn to 35.1bn over the year, with net debt / EBITDA LTM at 2.12

— A 4.54% dividend yield against P/E LTM of 14.9 – the dividend remains the main support for the valuation

— EV/EBITDA of 10.1 against a three-year average of 10.0 – the stock is priced exactly in line with its own history

Key figures, AED bn

Revenue added 5.4% after a 2.6% decline a quarter earlier – an acceleration, but a modest one

In the third quarter of 2026 DEWA's revenue came to AED 10,874.5mn, up 5.4% year on year. That is an acceleration from the second quarter, when revenue fell 2.6%: the company returned to growth after one weak quarter.

The growth is not yet convincing: 5.4% is a modest pace for a utility, and it is below the 8.2% seen in the first quarter of 2026. Revenue is traditionally driven by power generation and water desalination, but the facts do not break it down by segment, so the cause of the acceleration cannot be named.

What matters more for valuation is the trailing twelve months: revenue of AED 33,700.0mn. That is the base for EV/EBITDA, and it determines how expensive the company is.

The net margin rose to 36.0% from 35.0%, and that is the entire margin gain

Net profit for the third quarter of 2026 was AED 3,912.6mn, up 8.4% year on year. The net margin rose to 36.0% from 35.0% a year earlier – a gain of one percentage point.

Such a margin gain on revenue growth of 5.4% means profit grew faster than revenue. The facts do not disclose the cause: operating profit and EBITDA for the reported quarter are not given, so it is impossible to say which cost line delivered the saving.

A 36.0% net margin is high for a utility, but it rests on a stable tariff model. Unless tariffs are revised upward, the margin is unlikely to rise much further.

Operating cash flow of AED 6,806.7mn covered capital expenditure almost threefold

Operating cash flow for the third quarter of 2026 was AED 6,806.7mn. Capital expenditure over the same period was AED 2,323.7mn, so the flow covered it almost threefold.

Free cash flow therefore remains firmly positive. That matters for the dividend story: the company generates enough cash to fund investment and pay shareholders without adding debt to do so.

Over the trailing twelve months operating cash flow was AED 21,215.7mn. That is a stable base, but it does not offset the fact that net debt rose by AED 6.1bn over the year – cash went out not only to investment but also to payouts.

Net debt rose from AED 29.0bn to 35.1bn over the year, with net debt / EBITDA LTM at 2.12

As of 30 September 2026 DEWA's net debt stood at AED 35,061.4mn. A year earlier, on 30 September 2025, it was AED 29.0bn – an increase of AED 6.1bn over 12 months. Over the third quarter debt barely moved: from AED 35.2bn on 30 June to AED 35.1bn on 30 September.

Net debt to EBITDA over the trailing twelve months is 2.12. That is a moderate level for a utility with predictable cash flow, but it is higher than it would be with debt of AED 29.0bn.

Interest costs are not disclosed in the facts, so debt service cannot be assessed. The level stands: 2.12x EBITDA is not critical, but it leaves little room for large borrowings to fund dividends.

A 4.54% dividend yield against P/E LTM of 14.9 – the dividend remains the main support for the valuation

DEWA's dividend yield over the trailing twelve months is 4.54%. Against a market capitalisation of AED 135,500.0mn that is roughly AED 6.2bn of payouts, or about 68% of trailing twelve-month net profit of AED 9,086.8mn.

Our estimate for the current year's dividend is about 4.5% on the current price, assuming the company keeps its payout at last year's level and profit does not fall. That hinges on two things: the profit base, which grew 8.4% in the third quarter, and the payout policy, which the company has not changed.

A 4.54% yield is moderate. It is below what risk-free instruments in the region offer, but above the average utility dividend yield. For an investor buying DEWA for the dividend, what matters is that the payout is covered by free cash flow rather than financed with debt.

What could make the payout smaller: a rise in capital expenditure, already visible in the fourth quarter of 2025 (AED 3,443.0mn against AED 2,323.7mn in the third quarter of 2026), or a slowdown in profit. Neither looks threatening for now.

EV/EBITDA of 10.1 against a three-year average of 10.0 – the stock is priced exactly in line with its own history

EV/EBITDA over the trailing twelve months is 10.1. Its own three-year average is 10.0. The gap is +1%, meaning the stock trades in line with its history, with neither a discount nor a meaningful premium.

P/E over the trailing twelve months is 14.9. With a 36.0% net margin and 8.4% profit growth, that multiple looks neither cheap nor expensive. It fits a company growing moderately and paying a stable dividend.

A comparison with the sector or peers is not possible: the facts contain no such data. Even without it the picture is clear – DEWA's valuation offers no room for re-rating. For the multiple to move up, either profit must grow faster than expected or rates must fall, making the dividend yield more attractive.

Valuation on the latest reported figures

Bottom line

The strong part of the report is profit: it rose 8.4% and the margin climbed to 36.0%. Operating cash flow of AED 6,806.7mn covered capital expenditure almost threefold, and that supports the dividend. The weak part is debt: it rose from AED 29.0bn to 35.1bn over the year, with net debt / EBITDA at 2.12. The valuation is 10.1 EV/EBITDA against a three-year average of 10.0, a 1% premium: there is no cushion. Our conclusion: fairly valued – EV/EBITDA of 10.1 against its own three-year average of 10.0, a 1% premium to history. Our view: the share is fairly valued; no portal model for this share; EV/EBITDA 10.1 against a 3-year average of 10.0, in line with its history.