KuybyshevAzot: EBITDA margin up to 27.1%, but cash flow lags profit

On August 25, KuybyshevAzot released its results for the first half of 2026: revenue fell 4.7% year on year, EBITDA rose 31.5%, and net profit jumped 59.6%. This review looks at what drove the margin expansion, why operating cash flow is well below profit, and what it means for dividends.

Key takeaways

— EBITDA margin rose to 27.1% from 19.7% a year earlier, despite lower revenue

— Net profit for the half-year grew 59.6%, but operating cash flow for the trailing twelve months is only RUB 9.4 bn

— Debt leverage stands at 0.81 EBITDA – a moderate level, but absolute debt fell by RUB 11.1 bn over the year

— Dividend yield of 1.2% over 12 months is far from the 10.5% considered fair for the stock

— Shares rose 1.0% after the report – the market saw no reason for a re-rating

— P/E LTM of 7.2 and EV/EBITDA LTM of 3.3 – valuation below historical levels, but cash flow does not confirm profit

Key figures, RUB bn

EBITDA margin rose to 27.1% from 19.7% a year earlier, despite lower revenue

In the first half of 2026, KuybyshevAzot's revenue fell 4.7% year on year, but EBITDA rose 31.5%. As a result, EBITDA margin climbed to 27.1% from 19.7% in the same period a year earlier.

Margin expansion despite falling revenue points to a significant reduction in cost of sales or operating expenses. The exact reason is not disclosed in the available data, but the effect is clear: the company has become noticeably more efficient at converting revenue into operating profit.

Net profit for the half-year grew 59.6%, but operating cash flow for the trailing twelve months is only RUB 9.4 bn

Net profit for the first half of 2026 grew 59.6% year on year, and net margin reached 13.2% versus 7.9% a year earlier. However, operating cash flow for the trailing twelve months was only RUB 9.4 bn – noticeably less than net profit for the same period (RUB 8,989 m).

The gap between profit and cash flow signals that part of the profit may be non-cash or that working capital is consuming funds. For shareholders this matters: dividends are paid from cash, not paper profit.

Debt leverage stands at 0.81 EBITDA – a moderate level, but absolute debt fell by RUB 11.1 bn over the year

As of the latest balance sheet date, KuybyshevAzot's net debt stood at RUB 21,283 m, equivalent to 0.81 EBITDA for the trailing twelve months. This is a moderate level that does not threaten financial stability.

Over the year, net debt fell by RUB 11.1 bn – the company is actively repaying liabilities, which supports its credit profile. However, with such a decline in debt and modest operating cash flow, the question remains: what sources financed the repayment?

Dividend yield of 1.2% over 12 months is far from the 10.5% considered fair for the stock

Over the last 12 months, KuybyshevAzot paid RUB 4.0 per share, giving a yield of 1.2% at the current price. Our model estimates the next payout at RUB 4.56 per share, corresponding to a forward yield of 1.3%.

The fair yield for this stock, in our view, is 10.5%. The current level of payments is many times lower, and this is the main argument against buying for dividend-oriented investors. The payout ratio is only 0.14 of profit, meaning the company retains almost all earnings in the business.

Shares rose 1.0% after the report – the market saw no reason for a re-rating

The share price before the release was RUB 362.2. On the release day, the stock rose 0.2%, and by August 17, 2026, it had gained another 1.0%. This dynamics suggests investors took the results neutrally.

The rise in profit and margin did not cause a stir, probably due to weak cash flow and low dividend yield. The market has already priced in moderate expectations, and stronger signals are needed for a re-rating.

P/E LTM of 7.2 and EV/EBITDA LTM of 3.3 – valuation below historical levels, but cash flow does not confirm profit

For the trailing twelve months, the shares trade at a P/E of 7.2 and EV/EBITDA of 3.3. These are low multiples, especially given the profit growth in the reported half-year.

However, the valuation discount is justified: operating cash flow for the twelve months (RUB 9.4 bn) is significantly lower than net profit (RUB 8,989 m), which casts doubt on the quality of earned profit. Until cash generation confirms reported profit, the market is unlikely to pay more.

Valuation on the latest reported figures

Bottom line

KuybyshevAzot showed strong growth in EBITDA and net profit in the first half of 2026, with margin reaching 27.1% – the main positive of the report. However, operating cash flow for the trailing twelve months (RUB 9.4 bn) is noticeably below net profit, casting doubt on the quality of earnings. Debt leverage is moderate, and net debt fell by RUB 11.1 bn over the year, but dividends remain symbolic – a yield of 1.2% versus a fair 10.5%. For shareholders, the key question is whether the company can convert profit into cash; otherwise, the low valuation (P/E 7.2) may persist for a long time.