Lenenergo: profit grows slower than revenue, dividend yield half the fair level

On August 15, 2026, Lenenergo released its results for the first half of 2026. Revenue grew 12.5% year-on-year, EBITDA 10.0%, net profit 5.5%. This review examines why margins are compressing, what is happening with debt, and why the shares trade at a discount to their own history.

Key takeaways

— Revenue grew 12.5%, but EBITDA margin fell from 64.2% to 62.7%

— Net profit grows slower than revenue due to margin compression

— Net debt is negative, but Net Debt/EBITDA stands at -0.32

— Shares trade at a discount to their own history: EV/EBITDA 1.95 vs 3.21 three-year average

— Dividend yield of 2.91% over 12 months, but the model estimates a fair yield of 10.5%

Key figures, RUB bn

Revenue grew 12.5%, but EBITDA margin fell from 64.2% to 62.7%

In the first half of 2026, Lenenergo's revenue reached RUB 147.0 billion, up 12.5% year-on-year. EBITDA for the same period reached 62.7% of revenue, versus 64.2% a year earlier. Thus, revenue growth did not fully translate into operating profit.

The 1.5 percentage point decline in margin means operating expenses grew faster than revenue. This could be due to higher network maintenance costs or other operational factors, but the exact reason is not disclosed in the report. Nevertheless, the margin remains high, typical for a grid company.

Over the trailing twelve months, EBITDA amounted to RUB 65,555.5 million, confirming the sustainability of the operating business. However, investors should watch the margin trend in the next report: if it continues, it could pressure profits.

Net profit grows slower than revenue due to margin compression

Net profit for the first half of 2026 grew 5.5% year-on-year, while revenue increased 12.5%. Net margin fell from 27.7% to 26.0% – a direct consequence of operational compression, and possibly higher interest expenses or tax burden.

Over the trailing twelve months, net profit amounted to RUB 35,486.5 million. At the current market cap of RUB 149,268.2 million, this gives a P/E LTM of 4.21 – a low figure, indicating undervaluation if profit remains at this level.

However, slower profit growth relative to revenue means the company is not fully realizing operational leverage. If margins continue to decline, net profit growth may remain below revenue.

Net debt is negative, but Net Debt/EBITDA stands at -0.32

As of the latest balance sheet date, Lenenergo's net debt stood at RUB -21,129.9 million, meaning cash exceeds debt. Over the last 12 months, net debt decreased by RUB 1.7 billion, and compared to the previous reporting date – by RUB 2.1 billion.

The Net Debt/EBITDA LTM ratio is -0.32, reflecting a net cash position. This gives the company financial flexibility for investments or dividend payments.

However, it is important to understand that a negative net debt does not automatically imply a high dividend yield – the decision on payouts depends on the investment program and company policy.

Shares trade at a discount to their own history: EV/EBITDA 1.95 vs 3.21 three-year average

The current EV/EBITDA LTM multiple is 1.95, significantly below the three-year average of 3.21. This means the market values the company cheaper than its average over the past three years.

The low multiple may be due to concerns about profit growth rates and dividend policy. However, with stable operating cash flow of RUB 66,500.0 million over the trailing twelve months, such valuation looks conservative.

For comparison, P/E LTM is 4.21, also indicating undervaluation relative to historical levels. If the company maintains profitability, potential for re-rating exists.

Dividend yield of 2.91% over 12 months, but the model estimates a fair yield of 10.5%

Over the last 12 months, Lenenergo paid no dividends, resulting in a dividend yield of 0%. However, the model estimates the next payment at RUB 0.61 per share, which at the current price of RUB 12.84 corresponds to a forward yield of 4.5%.

The fair yield for this name, according to our model, is 10.5%, significantly higher than the current forward. This implies the market does not price in generous payouts, possibly due to uncertainty about dividend policy.

The payout ratio embedded in the model is 0.15 of profit, which is conservative. If the company decides to increase payouts, the yield could rise, but for now investors receive only 2.91% through capital appreciation.

Valuation on the latest reported figures

Bottom line

Lenenergo shows steady revenue growth and high operational efficiency, but profit growth lags due to margin compression. The company has negative net debt and trades at a discount to its own history, creating potential for re-rating. However, the key question for shareholders is dividend policy: with a current forward yield of 4.5% and a fair 10.5%, the market clearly does not believe in generous payouts. If the company does not increase dividends, the low valuation may persist.