Overview
ACL Cables manufactures and markets low-voltage, control, telecommunications and medium/high-voltage cables for Sri Lankan and export customers, serving institutional and retail channels. Its latest quarter showed a split result: revenue and net profit increased, while operating profit declined, indicating that the earnings improvement did not come from the core operating line.
Price performance
At the LKR 94.00 close on 21 August 2026, ACL had risen 54.6% over one year versus a 7.2% gain for the ASPI. Over six months, however, the share fell 4.8% while the index fell 9.7%, so the longer-term outperformance has not been matched by recent momentum.
The share sat 11.9% below its 52-week high and at 73.5% of its 52-week range. Recent volatility was 17.1% annualised, below its own one-year 29.0%, while 20-day average volume was 21.9% below its 60-day average. The 1:3 share subdivision effective 29 December 2025 changed the share basis, so adjusted returns are the appropriate comparison.
Valuation
ACL trades on a P/E of 9.93, placing it at the 27th sector percentile against 23 manufacturing peers and below the sector median of 12.63. Its P/B of 1.74 is close to the sector median of 1.72, while the latest audited ROE was 14.9%, providing reasonable support for a valuation near book-sector levels.
The 0.5% dividend yield is at the 5th sector percentile and is the clearest valuation drawback. The restated dividend per share rose from LKR 0.417 in FY2024 to LKR 0.5 in FY2025, after being unchanged between FY2023 and FY2024, so the low yield reflects a small payout rather than a falling recent payout.
News and sentiment
Coverage was normal, with 7 material articles in the 90-day window: 2 positive, 3 negative and 2 neutral. The most substantive company developments were ACL's addition to the S&P SL20 effective 22 June 2026 and the confirmed 1:3 share subdivision, which went ex on 29 December 2025.
The available coverage does not provide a newer financial-period result than the quarter ended 30 June 2026. Director-status announcements in March were neutral and carried limited impact.
Financials
For the quarter ended 30 June 2026, revenue and net profit grew year-on-year, while operating profit fell. The latest gross, operating and net margins were 24.2%, 16.9% and 18.5%, respectively, compared with 29.7%, 22.5% and 19.0% a year earlier. Gross and operating margins ranked only 4th of 7 comparable June quarters, while net margin ranked 3rd of 7, making the net result materially stronger than the operating result.
The share count increased from 239.6 million to 718.7 million following the 1:3 subdivision, so the fall in reported quarterly EPS from 6.71 to 2.56 is mechanical and should not be read as an operating decline. Group equity also increased from LKR 37.62 billion at June 2025 to LKR 45.28 billion at June 2026. Net profit exceeded operating profit in the latest quarter because below-line items were a net tailwind, unlike the positive drag recorded in earlier quarters.
Risks
The main risk is earnings quality: annual cash conversion was only 0.53 times for the year ended 31 March 2025, meaning operating profit did not arrive fully as operating cash. This matters because the latest net-profit growth occurred while operating profit declined.
The balance sheet itself is lightly geared, with total debt of LKR 1.69 billion, interest cover of 27.96 times and a current ratio of 5.86. These figures reduce immediate financing pressure, but 15.5% of group profit belonged to minority shareholders, so group net profit is not the same pool of earnings attributable to ACL shareholders. Manufacturing conditions remain supportive, but July inflation was 7.2% and energy costs were elevated, leaving input-cost risk relevant.
Outlook
As at 22 August 2026, the next specific event is the quarter ending 30 September 2026, with the filing expected between 10 November 2026 and 9 January 2027. That filing will show whether the latest operating-margin weakness was temporary or part of a broader change in profitability; the current data cannot establish that.
The wider manufacturing backdrop was constructive, with PMI rising to 55.0 from 53.0 in July, while lower Treasury bill yields may improve financing conditions across the sector. These are sector-level conditions, not evidence of a direct ACL benefit, and the next company filing remains the key test of whether operating performance is improving.