IDGC Siberia: double-digit revenue and EBITDA growth, but cash flow remains negative

On August 27, 2026, IDGC Siberia released its Q2 2026 results: revenue grew 20.7% YoY to RUB 32,898 million, EBITDA – 116.7% to RUB 4,303 million. This review examines what drove the growth, why operating cash flow remains negative, and how it affects the company's valuation.

Key takeaways

— Q2 revenue grew 20.7% to RUB 32,898 million, driven mainly by higher electricity transmission tariffs

— EBITDA doubled thanks to revenue growth outpacing operating expenses

— Net profit reached RUB 1,021.8 million versus a loss a year earlier – helped by lower interest expenses

— Operating cash flow remains negative – minus RUB 4.7 million for the quarter, worse than a year ago

— Debt leverage is 2.55 EBITDA – a level that does not allow for generous dividends

— Capex for the half-year rose to RUB 5,441.6 million, exceeding operating cash flow

— Shares trade at P/E of 10.5 and EV/EBITDA of 4.7 – below historical averages, but given weak cash flow

Key figures, RUB bn

Q2 revenue grew 20.7% to RUB 32,898 million, driven mainly by higher electricity transmission tariffs

In Q2 2026, IDGC Siberia's revenue reached RUB 32,898 million, up 20.7% YoY. The main contributor was electricity transmission – RUB 31,947.9 million, up 20% from Q2 2025. Growth was driven mainly by tariffs rather than volumes: the company does not disclose physical volumes, but segment dynamics show double-digit growth in all branches except Khakasenergo.

Technological connection brought RUB 392.6 million – 19% more than a year ago, but only 1.2% of revenue. Other revenue more than doubled to RUB 538.8 million, mainly due to joint suspension and construction services. Thus, revenue growth is broad-based and not due to one-off factors.

EBITDA doubled thanks to revenue growth outpacing operating expenses

EBITDA in Q2 grew 116.7% to RUB 4,303 million, with margin expanding from 7.3% to 13.1%. Operating expenses rose 12.5% to RUB 30,628 million, notably slower than revenue. Key cost items – electricity transmission services (+10.4%), staff costs (+14.6%), and electricity for losses (+15.5%) – grew slower than transmission tariffs.

As a result, operating profit reached RUB 3,036.6 million versus RUB 773.8 million a year earlier. Operating margin hit 9.2% versus 2.8% in Q2 2025. This is the best quarterly result in several years.

Net profit reached RUB 1,021.8 million versus a loss a year earlier – helped by lower interest expenses

Net profit in Q2 reached RUB 1,021.8 million versus a loss of RUB 1,282.2 million a year earlier. Besides operating profit growth, lower interest expenses helped: they fell 28% YoY to RUB 1,799.7 million. This is due to lower key rate and debt refinancing.

Net margin was 3.1% versus -4.7% a year earlier. For H1, net profit reached RUB 5,393.2 million versus a loss of RUB 391.3 million in H1 2025. Return on equity (ROE) for the last 12 months is 22.9%, above the cost of debt.

Operating cash flow remains negative – minus RUB 4.7 million for the quarter, worse than a year ago

Despite profit, operating cash flow in Q2 was minus RUB 4.7 million – almost zero, but negative. A year earlier it was positive at RUB 1,451.2 million. For H1, OCF is also negative at minus RUB 9.4 million versus plus RUB 2,902.5 million a year earlier.

The reason is growth in receivables and advances paid, as well as a decline in payables. The cash flow statement shows that working capital changes consumed RUB 10.1 billion in H1. This is typical for grid companies during tariff growth: consumers pay with a delay.

Debt leverage is 2.55 EBITDA – a level that does not allow for generous dividends

Net debt at end-June was RUB 43,090.2 million, corresponding to 2.55 EBITDA for the last 12 months. During the quarter, net debt rose by RUB 2.4 billion, but over 12 months it fell by RUB 1.9 billion. The level of 2.55 EBITDA is moderate for a grid company, but leaves little room for shareholder payouts.

Over the last 12 months, the company paid no dividends, and our model estimates the next payment also at RUB 0.0 per share. With a fair yield of 12% and a payout ratio of 0.59 of profit, the company could pay, but cash flow does not allow it. While OCF is negative, dividends are unlikely.

Capex for the half-year rose to RUB 5,441.6 million, exceeding operating cash flow

In H1 2026, capital expenditures were RUB 5,441.6 million – 14.8% more than a year earlier (RUB 4,741.7 million). This exceeds operating cash flow for the same period (minus RUB 9.4 million). The gap is covered by borrowings: loan proceeds in H1 were RUB 24,021 million, repayments – RUB 26,498.8 million.

The investment program remains intense: the company is investing in network upgrades, which supports asset quality but increases the need for debt. Given negative OCF, capex financing fully depends on the debt market.

Shares trade at P/E of 10.5 and EV/EBITDA of 4.7 – below historical averages, but given weak cash flow

IDGC Siberia's market capitalization is RUB 35,982.4 million, giving P/E for the last 12 months of 10.5 and EV/EBITDA of 4.7. These multiples are lower than most Russian grid companies and below its own three-year historical averages (EV/EBITDA average around 6).

The low valuation reflects weak cash flow and dividend uncertainty. If the company can stabilize OCF and start paying dividends, the valuation may re-rate. But until then, the discount will persist.

Valuation on the latest reported figures

Bottom line

IDGC Siberia showed a strong quarter: revenue grew 20.7%, EBITDA doubled, net profit turned positive. However, operating cash flow remains negative, questioning the sustainability of the financial model. Debt leverage of 2.55 EBITDA is moderate, but with such cash flows the company cannot pay dividends and has to finance its investment program with borrowings. For an investor, the key question is when OCF turns positive: if it happens, the valuation of 4.7 EV/EBITDA looks attractive; if not, the discount will persist.