IDGC Center & Volga: profit grows faster than revenue, but quarterly operating cash flow nearly dries up

28 августа МРСК ЦП раскрыла результаты за второй квартал 2026 года: выручка выросла на 11,5% год к году, до 39,5 млрд руб., EBITDA – на 11,2%, а чистая прибыль – на 20,7%. При этом операционный денежный поток за квартал составил лишь 4,6 млрд руб. против 2,7 млрд руб. годом ранее, что ставит вопрос о качестве прибыли и способности компании финансировать инвестпрограмму и дивиденды.

Key takeaways

— Revenue in Q2 grew 11.5% to RUB 39.5 bn, driven mainly by electricity transmission services

— EBITDA margin remained almost flat at 30.4% versus 30.5% a year earlier; profit growth was supported by lower finance costs

— Net profit for the quarter rose 20.7% to RUB 6.0 bn, outpacing revenue thanks to reduced interest payments

— Operating cash flow for the quarter was RUB 4.6 bn – barely enough to cover capex of RUB 5.8 bn

— Net debt at end-June was negative at minus RUB 4.9 bn; the company remains a net lender

— Trailing dividend yield is 15.1%, well above our fair yield of 10.5%

— EV/EBITDA multiple is 0.97 – below its three-year average of 1.46; the stock trades at a discount to its own history

Key figures, RUB bn

Revenue in Q2 grew 11.5% to RUB 39.5 bn, driven mainly by electricity transmission services

In Q2 2026, IDGC Center & Volga's revenue reached RUB 39.5 bn, up 11.5% year-on-year. Electricity transmission contributed the most – RUB 36.5 bn versus RUB 32.7 bn a year earlier. Grid connections brought RUB 1.5 bn versus RUB 1.2 bn, while other revenue was RUB 1.3 bn, slightly below the prior year's RUB 1.4 bn.

Higher tariffs and volumes in electricity transmission drove the top line. For H1, revenue reached RUB 85.9 bn, up 12.8% year-on-year. The company operates under regulated tariffs, so growth is capped by regulatory decisions.

EBITDA margin remained almost flat at 30.4% versus 30.5% a year earlier; profit growth was supported by lower finance costs

EBITDA for Q2 rose 11.2% to RUB 12.0 bn, but the margin was nearly flat at 30.4% versus 30.5% a year earlier. Operating expenses grew in line with revenue: staff costs rose 16.7% (to RUB 7.9 bn), materials costs 14.9% (to RUB 4.9 bn), and production services 8.8% (to RUB 14.4 bn).

The main driver of faster profit growth was lower finance costs: they fell from RUB 1.7 bn to RUB 1.1 bn in the quarter. Interest payments on loans and borrowings dropped from RUB 1.5 bn to RUB 0.9 bn, reflecting reduced debt and, likely, lower rates.

Net profit for the quarter rose 20.7% to RUB 6.0 bn, outpacing revenue thanks to reduced interest payments

Net profit for Q2 reached RUB 6.0 bn, up 20.7% year-on-year. The growth was driven not so much by operations as by lower finance costs: interest payable fell 38% – from RUB 1.5 bn to RUB 0.9 bn in the quarter. Net margin widened from 14.1% to 15.2%.

For H1, net profit was RUB 14.8 bn versus RUB 12.0 bn a year earlier. The company also earned RUB 2.4 bn in interest income on bank deposits and account balances, partially offsetting interest expenses.

Operating cash flow for the quarter was RUB 4.6 bn – barely enough to cover capex of RUB 5.8 bn

Operating cash flow in Q2 was RUB 4.6 bn, while capex reached RUB 5.8 bn. Thus, free cash flow was negative – about minus RUB 1.2 bn for the quarter. For H1, operating cash flow was RUB 17.8 bn and capex RUB 12.5 bn, yielding positive free cash flow of RUB 5.3 bn.

Seasonality plays a role: in Q2 last year, operating cash flow was even lower at RUB 2.7 bn, and capex was RUB 5.2 bn. Still, the sustainability of cash generation remains a key question for investors, especially given dividend payments.

Net debt at end-June was negative at minus RUB 4.9 bn; the company remains a net lender

At end-June, IDGC Center & Volga's net debt was minus RUB 4.9 bn, meaning cash and equivalents (RUB 35.1 bn) exceeded total debt (RUB 30.2 bn). A year earlier, the company was also a net lender with net debt of minus RUB 3.5 bn. Over the last 12 months, net debt decreased by RUB 8.4 bn.

The net debt to EBITDA ratio for the trailing twelve months is 0.04 – almost zero leverage. This provides financial flexibility but also points to excess liquidity that could be returned to shareholders.

Trailing dividend yield is 15.1%, well above our fair yield of 10.5%

Over the last 12 months, the company paid RUB 0.0725 per share, providing a yield of 15.1% at the current price. Our model estimates the next dividend at RUB 0.08 per share, implying a forward yield of 16.6%. We consider a fair yield for this issuer to be 10.5%, so the current price looks attractive for dividend income.

Dividends declared for H1 2026 amounted to RUB 8.2 bn, corresponding to a payout ratio of about 0.35 of profit. The company maintains a high payout ratio, supporting investor interest in the stock.

EV/EBITDA multiple is 0.97 – below its three-year average of 1.46; the stock trades at a discount to its own history

EV/EBITDA for the trailing twelve months is 0.97, well below the three-year average of 1.46. P/E is also low at 2.07. These levels suggest the market is undervaluing the company, especially given stable cash flow and low debt.

ROE is 19.2%, above the cost of capital for most Russian companies. With the current dividend policy and moderate capex, the stock can continue to deliver high total shareholder returns.

Valuation on the latest reported figures

Bottom line

IDGC Center & Volga reported Q2 with net profit up 20.7%, notably outpacing revenue growth. The main driver was lower interest expenses, not improved operational efficiency – EBITDA margin stayed at 30.4%. The company maintains negative net debt and low leverage, supporting high dividends. However, weak quarterly operating cash flow reminds of seasonality and that free cash does not always cover capex. At current valuation (EV/EBITDA 0.97 versus average 1.46), the stock looks cheap, but the key question is whether the company can sustain margins and generate stable cash flow under regulated tariffs.