Overview
ACL Cables manufactures electrical cables, conductors and related electrical products for institutional, retail and export markets. The latest June-quarter result delivered higher net profit despite a weaker operating outcome, with favourable below-the-line items offsetting margin pressure in the core business.
Price performance
At LKR 94.20 on 1 September 2026, ACL was down 5.6% over three months against a 4.5% decline in the ASPI, but up 59.1% over one year versus the index's 3.6% gain. Adjusted returns reflect the December 2025 share subdivision and should not be confused with the unadjusted screen-price change.
The share stood 73.8% through its 52-week range. Both recent volatility and 20-day trading volume were below ACL's own longer-run norms, indicating a quieter recent trading period rather than a market-wide comparison.
Valuation
A P/E of 9.96 is below the manufacturing median of 12.57 and sits at the 27th percentile of peers with available earnings multiples. The P/B of 1.74 is broadly aligned with the sector median, while a 17.5% twelve-month ROE supports a valuation above book value.
The 0.5% dividend yield is at the 5th percentile of sector peers. Dividend per share increased in FY2025 after holding steady in the preceding year, but the low yield and 5.3% payout show that income is not the main valuation feature.
News and sentiment
Direct coverage was normal, with 7 material articles in the past 90 days: 2 positive, 3 negative and 2 neutral. Company-specific items included ACL Cables joining the S&P SL20 effective 22 June and director or committee updates.
The confirmed 1:3 share subdivision took effect on 29 December 2025. No undated corporate actions are listed as pending.
Financials
June-quarter revenue grew year-on-year and net profit also increased, but operating profit declined. Gross margin fell to 24.2% from 29.7%, operating margin fell to 16.9% from 22.5%, and net margin eased to 18.5% from 19.0%.
Against prior June quarters on the same group reporting basis, gross and operating margins ranked middling, while net margin was also middling despite being near the top of the recent all-quarter record. Below-the-line items added to, rather than reduced, net profit in the quarter, explaining why bottom-line growth outpaced the operating result.
Equity increased year-on-year. The December 2025 subdivision increased the share count mechanically, so reported per-share comparisons across the action do not by themselves describe earnings growth.
Risks
The leading risk is cash generation: annual cash conversion fell to 0.16 times operating profit from 0.53 times a year earlier, meaning accounting profit was only weakly converted into operating cash. This matters more than balance-sheet leverage because the business reported positive free cash flow but materially less cash backing per unit of operating profit.
Funding risk appears limited, with gearing at 3.6% of owners' equity, interest cover at 34.38 times and a current ratio of 7.29. Minority shareholders received 12.9% of annual group profit, so group profit is not wholly attributable to ACL shareholders.
Outlook
As at 1 September 2026, the next filing covers the September quarter and is expected between 11 November 2026 and 27 February 2027. It will show whether the June-quarter divergence between weaker operating profit and stronger net profit persisted, and whether revenue growth translated into cash generation.
Manufacturing conditions were expanding in July, with the PMI at 55.0, although supplier delivery times lengthened and export conditions were mixed. The available data does not provide ACL's order book, project pipeline or product-level demand, so it cannot establish the source or durability of future sales growth.