du (EITC): growth slowed, but margin expanded — cash flow turned negative

25 августа du (EITC) раскрыла результаты за второй квартал 2026 года. Выручка выросла на 4,6% год к году, до 4 083,5 млн AED, EBITDA — на 16,9%, до 1 456,9 млн AED, а чистая прибыль — на 9,8%, до 797,8 млн AED. При этом операционный денежный поток во втором квартале оказался отрицательным (–76,7 млн AED), что делает акцию скорее привлекательной лишь при условии восстановления генерации кэша.

Key takeaways

— du (EITC) revenue grew 4.6% in Q2 — the slowest in five quarters

— EBITDA margin reached 35.7% versus 31.9% a year earlier — operating efficiency keeps improving

— Operating cash flow turned negative at AED 76.7 million due to working capital build-up

— Net debt rose to AED 1,427.9 million, but the ratio to EBITDA remains low at 0.27

— Trailing dividend yield of 5.7% is above the market average

— The portal's model sees 8% upside from the current price

Attractiveness

Key figures, AED bn

du (EITC) revenue grew 4.6% in Q2 — the slowest in five quarters

In Q2 2026, du (EITC) revenue reached AED 4,083.5 million, up 4.6% year-on-year. This is a noticeable slowdown compared with previous quarters: Q1 2026 saw 6.9% growth and Q4 2025 — 10.6%. Still, the absolute level remains close to record highs.

Over the trailing twelve months, revenue reached AED 16,400.0 million. The main driver remains subscriber base growth and data consumption, although the pace is gradually normalising after a period of rapid expansion.

EBITDA margin reached 35.7% versus 31.9% a year earlier — operating efficiency keeps improving

EBITDA in Q2 2026 grew 16.9% year-on-year to AED 1,456.9 million, with margin expanding from 31.9% to 35.7%. This is the best reading in recent quarters — the company keeps costs under control despite slower revenue growth.

Over the trailing twelve months, EBITDA reached AED 5,390.0 million. The margin improvement likely stems from network and marketing cost optimisation, though the report does not specify the exact drivers.

Operating cash flow turned negative at AED 76.7 million due to working capital build-up

In Q2 2026, du (EITC) operating cash flow came in at AED –76.7 million versus AED +207.5 million a year earlier. This is a rare event for the company — over the past four quarters, the average quarterly figure exceeded AED 1,000 million.

The negative reading likely reflects seasonal working capital swings, including payments to suppliers and tax settlements. Over the trailing twelve months, operating cash flow remains positive at AED 5,200.0 million, providing a comfortable cushion for investments and dividends.

Net debt rose to AED 1,427.9 million, but the ratio to EBITDA remains low at 0.27

At the end of Q2 2026, du (EITC) net debt stood at AED 1,427.9 million, up AED 1.1 billion from the previous reporting date. Over the past twelve months, the increase was marginal — just AED 0.1 billion.

The net debt to EBITDA ratio over the trailing twelve months is 0.27 — a very conservative level that leaves room for higher leverage without threatening the credit rating.

Trailing dividend yield of 5.7% is above the market average

Over the trailing twelve months, du (EITC) paid dividends that translated into a 5.7% yield at the current price. This is notably higher than many regional telecoms, making the stock attractive for income-oriented investors.

The company consistently channels a large share of profit into dividends, as confirmed by a high return on equity of 33.4%. However, future payouts will depend on maintaining positive operating cash flow.

The portal's model sees 8% upside from the current price

According to the portal's model, based on EBITDA growth and a target multiple, the fair value of du (EITC) shares is 8% above the current market price. This is moderate upside, suggesting no significant mispricing.

The current EV/EBITDA multiple is 10.1, above the three-year average of 8.2. Trailing P/E stands at 17.1. The stock trades at a premium to its own history, which limits upside but is justified by sustained margin expansion.

Valuation on the latest reported figures

Bottom line

du (EITC)'s Q2 2026 report shows strong operating efficiency: EBITDA margin expanded to 35.7%, and net profit grew 9.8%. However, revenue slowdown to 4.6% and negative operating cash flow are signals not to be ignored. Leverage remains minimal, and a 5.7% dividend yield supports the stock's appeal. The key question for holders is whether cash generation will recover in coming quarters to justify the current valuation. Verdict: rather attractive.