Rosseti Moscow Region: double-digit revenue and profit growth, but quarterly cash flow drops sharply

On August 28, Rosseti Moscow Region reported Q2 2026 results: revenue grew 22.6% YoY, EBITDA 28.2%, net profit 69.0%. EBITDA margin expanded to 32.2% from 30.8%, net margin to 13.3% from 9.7%. However, quarterly operating cash flow was only RUB 18.5 bn versus RUB 22.4 bn a year earlier. Shares trade at an EV/EBITDA multiple of 1.37 versus a three-year average of 1.84, which looks attractive, especially given our estimated dividend yield of 11.1%.

Key takeaways

— Q2 revenue grew 22.6% YoY to RUB 74.8 bn, driven by higher tariffs and electricity transmission volumes

— EBITDA increased 28.2% to RUB 24.1 bn, with margin expanding to 32.2% from 30.8%

— Net profit jumped 69.0% to RUB 10.0 bn, helped by higher operating profit and lower finance costs

— Quarterly operating cash flow fell to RUB 18.5 bn from RUB 22.4 bn a year earlier

— Capex for H1 totaled RUB 52.7 bn, in line with the investment program plan

— Net debt rose RUB 9.8 bn in the quarter and RUB 4.4 bn over 12 months to RUB 64.8 bn, with Net debt/EBITDA at 0.63

— Trailing 12-month dividend yield is 11.0%; our next dividend estimate is RUB 0.19 per share, implying a forward yield of 11.1%

Attractiveness

Key figures, RUB bn

Q2 revenue grew 22.6% YoY to RUB 74.8 bn, driven by higher tariffs and electricity transmission volumes

In Q2 2026, Rosseti Moscow Region's revenue reached RUB 74.8 bn, up 22.6% YoY. The main driver was electricity transmission: segment revenue rose to RUB 65.4 bn from RUB 54.5 bn a year earlier, an increase of about 20%. Grid connection services contributed RUB 6.9 bn versus RUB 4.8 bn in the prior year, up 43%.

Momentum continues to accelerate: quarterly revenue growth has consistently increased from +7.0% in Q1 2025 to +22.6% in Q2 2026. This reflects both tariff indexation for electricity transmission and higher volumes due to growing economic activity in Moscow and the Moscow region.

EBITDA increased 28.2% to RUB 24.1 bn, with margin expanding to 32.2% from 30.8%

EBITDA in Q2 2026 reached RUB 24.1 bn, up 28.2% YoY. EBITDA margin expanded to 32.2% from 30.8% a year earlier. Margin expansion was driven by revenue growing faster than operating expenses: cost of sales increased 13.2% (to RUB 60.1 bn) while revenue rose 22.6%.

In the cost structure, the share of electricity purchased to compensate for losses declined: it grew only 16.5% (to RUB 5.8 bn), below the revenue growth rate. Also positive was a 12.6% reduction in segment finance costs – to RUB 2.6 bn from RUB 2.9 bn a year earlier.

Net profit jumped 69.0% to RUB 10.0 bn, helped by higher operating profit and lower finance costs

Net profit in Q2 2026 grew 69.0% YoY to RUB 10.0 bn. Operating profit rose to RUB 15.7 bn from RUB 11.1 bn a year earlier, reflecting revenue growth and cost control. Finance costs (interest on debt) fell 12.6% at the segment level, also supporting profit.

Net margin expanded to 13.3% from 9.7% a year earlier. Profit growth significantly outpaced revenue growth, indicating high operational efficiency and favorable tariff dynamics.

Quarterly operating cash flow fell to RUB 18.5 bn from RUB 22.4 bn a year earlier

Operating cash flow in Q2 2026 was RUB 18.5 bn versus RUB 22.4 bn in the same period last year. The 17% decline occurred despite higher profit, indicating an increase in working capital – likely due to higher receivables and advances to suppliers.

For H1, operating cash flow totaled RUB 53.6 bn versus RUB 45.0 bn a year earlier, up 19%. Thus, the quarterly decline was partly offset by a strong Q1, when the flow reached RUB 35.1 bn.

Capex for H1 totaled RUB 52.7 bn, in line with the investment program plan

Capex for H1 2026 totaled RUB 52.7 bn, almost unchanged from RUB 52.9 bn a year earlier. The company continues its large-scale investment program to upgrade and expand the grid infrastructure of Moscow and the Moscow region.

Q2 capex was not disclosed separately, but for H1 it only slightly exceeded operating cash flow (RUB 53.6 bn). This means the company is funding investments mostly from operations, using debt only to cover temporary gaps.

Net debt rose RUB 9.8 bn in the quarter and RUB 4.4 bn over 12 months to RUB 64.8 bn, with Net debt/EBITDA at 0.63

At the end of Q2 2026, Rosseti Moscow Region's net debt stood at RUB 64.8 bn, up RUB 9.8 bn from the previous reporting date and RUB 4.4 bn over the trailing 12 months. The increase is related to capex financing and seasonal working capital fluctuations.

The net debt / EBITDA ratio for the trailing twelve months is 0.63 – a low level of leverage that leaves ample headroom. The company has access to credit lines and during H1 drew and repaid short-term loans totaling RUB 50.9 bn, indicating refinancing without a significant increase in net debt.

Trailing 12-month dividend yield is 11.0%; our next dividend estimate is RUB 0.19 per share, implying a forward yield of 11.1%

Over the trailing 12 months, the company paid dividends of RUB 0.1865 per share, providing a yield of 11.0% at the current price. Our model estimates the next dividend at RUB 0.19 per share, implying a forward yield of 11.1% – above the 10.5% level we consider fair for this issuer.

The payout ratio, by our estimate, is 0.4 of profit – a moderate level that allows balancing dividends with investment program funding. Given current profitability and cash flows, the company can sustain dividends at this level.

Valuation on the latest reported figures

Bottom line

The Q2 2026 report shows strong momentum: revenue and EBITDA are growing at double-digit rates, margins are expanding, and net profit rose 69% thanks to operational efficiency and lower interest expenses. Leverage remains low (net debt / EBITDA at 0.63), and the dividend yield is above the level we consider fair. However, quarterly operating cash flow declined, warranting attention to working capital dynamics. At the current valuation (EV/EBITDA of 1.37 versus a three-year average of 1.84), the shares look attractive, and our model upside is +87%.