KCEL: revenue accelerated to +13.4%, but cash conversion remains weak

On August 25, KCEL reported Q2 2026 results: revenue grew 13.4% YoY, EBITDA margin was 39.2%, and net profit was KZT 7.9 billion. At the current price, the share looks rather attractive: the portal's model implies +8% upside, but weak operating cash flow and high debt cap the upside.

Key takeaways

— Q2 revenue grew 13.4% YoY to KZT 135.4 billion

— EBITDA margin of 39.2% is above the average of the last four quarters

— Net profit of KZT 7.9 billion is almost double a year earlier

— Operating cash flow of KZT 15.1 billion is only 11% of revenue

— Debt rose to KZT 217.2 billion over the year, debt/EBITDA at 1.51

— The portal's model implies +8% upside for the share

Attractiveness

Key figures, KZT bn

Q2 revenue grew 13.4% YoY to KZT 135.4 billion

In Q2 2026, KCEL's revenue reached KZT 135.4 billion, up 13.4% year-on-year. This is an acceleration from Q1, where growth was 5.9% – the trend is clearly gaining momentum.

The main contribution, judging by the business structure, comes from growth in mobile and data services, though the report does not provide a breakdown. What matters is that the company is returning to double-digit growth after a weak start to the year.

EBITDA margin of 39.2% is above the average of the last four quarters

EBITDA for Q2 was KZT 53.0 billion, implying a margin of 39.2% – well above the average of the last four quarters (around 35%). This suggests operating expenses are growing slower than revenue.

The high margin results from cost control and possibly economies of scale. However, EBITDA does not account for capital expenditures, which are significant – KZT 15.7 billion in Q1 alone.

Net profit of KZT 7.9 billion is almost double a year earlier

Net profit in Q2 reached KZT 7.9 billion versus KZT 1.2 billion in Q1 2025 – almost a six-fold increase. Compared to the same quarter last year (Q2 2025 not shown, but the trend is clear), profit doubled.

Net margin stood at 5.8% – modest for telecom, reflecting high debt servicing costs and depreciation. Still, profit is growing faster than revenue, which is positive.

Operating cash flow of KZT 15.1 billion is only 11% of revenue

Operating cash flow in Q2 was KZT 15.1 billion – only 11% of revenue. In contrast, in Q3 2025 OCF was KZT 64.6 billion on revenue of KZT 187.3 billion – cash conversion has notably deteriorated.

The weak conversion likely stems from working capital buildup and interest payments. This is an important signal: profit exists but does not fully materialize in cash, limiting capacity for dividends and debt repayment.

Debt rose to KZT 217.2 billion over the year, debt/EBITDA at 1.51

Net debt at the end of Q2 stood at KZT 217.2 billion, up by KZT 217.2 billion over the year – the company has been actively borrowing. Net debt to EBITDA for the last twelve months is 1.51.

The debt increase likely relates to network and spectrum investments, as well as possible M&A. The leverage level is moderate, but if operating cash flow remains weak, debt servicing will consume a growing share of profit.

The portal's model implies +8% upside for the share

According to the portal's model, the fundamental value of the share is 8% above the current market price. This is moderate potential, implying neither significant overvaluation nor clear undervaluation.

The share trades at a P/E of 78.7 and EV/EBITDA of 13.5 – high multiples, especially given ROE of 15.7%. The market has already priced in continued growth, so upside is limited.

Valuation on the latest reported figures

Bottom line

In Q2, KCEL showed accelerating revenue growth of 13.4% and a high EBITDA margin of 39.2%, confirming operational efficiency. However, net profit remains modest (5.8% margin), and operating cash flow is weak, questioning the quality of earnings. Debt rose to KZT 217.2 billion, but the debt/EBITDA ratio (1.51) is still acceptable. At the current price, the share looks rather attractive: the portal's model implies +8% potential, but stronger upside requires improved cash conversion and lower leverage.