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Alliance Finance Company PLC: research report

ALLIView stock page →
UndervaluedbullishAug 15, 2026

Alliance Finance trades on a 4.8 P/E despite a profitable business, but latest-quarter net profit fell 8.2%. Heavy leverage is the central catch.

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Why bullish

  • The 4.8 P/E is at the 12th percentile of the finance sector, indicating unusually low earnings valuation.
  • Return on equity was 19.5%, while June operating and net margins ranked 2nd out of 8 comparable June quarters.
  • The company remained profitable, with annual net profit growth of 25.4% to the year ended 2026-03-31.

Against this. Debt equalled 696.5% of owners' equity at 2026-03-31, leaving the business highly dependent on funding conditions.

Operating margin
35.5%sector 40.4%
from 37.8% a year earlier
Net margin
15.4%sector 17.8%
from 16.0% a year earlier, revenue -5.1%
Return on equity
19.5%sector 13.0%
full year to Mar 31, 2026
P/E
4.6sector 6.9
earnings Rs 65.87 per share
P/B
0.87sector 0.94
book Rs 348.72 per share
Dividend yield
3.29%sector 2.16%
15.2% of earnings paid out

Current figures, updated daily from filings to Jun 30, 2026. The report below was written on Aug 15, 2026. Sector figures are the median of 54 listed companies in the same sector.

Overview

Alliance Finance Company is a Sri Lankan non-bank financial institution serving individuals, MSMEs and businesses through lending and other financial services. Its latest quarter remained profitable, but revenue and profit softened year-on-year after a strong audited year.

Price performance

Price action sits at 4.1% of its 52-week range, close to the low rather than the high. Recent volatility and trading volume were both below the company's own recent norms, while the news flow offers no clear explanation for the three-month fall.

Valuation

The dividend yield is 3.3%, but the payout has not followed a smooth upward path. Dividend per share fell from LKR 17.2 in FY2025 to LKR 10.0 in FY2026, making the yield less compelling as a growth signal even though the latest payout is covered 6.37 times by earnings.

News and sentiment

The main negative development was the 2026-06-15 withdrawal of a planned LKR 1.5 billion five-year tier-2 debenture issue because of adverse market conditions. The confirmed FY2026 dividend was LKR 10 per share, with an ex-date of 2026-07-27 and payment on 2026-08-14.

Financials

The audited year ended 2026-03-31 was stronger, with revenue up 15.8% and net profit up 25.4%. Owners' equity was LKR 11.99 billion on 33.696 million shares at June, with the share count unchanged from the comparable period. The below-line drag narrowed to LKR 518 million from LKR 594 million, but still removed a substantial portion of operating profit before tax and other effects.

Risks

Sector conditions add pressure around asset quality and funding discipline: finance companies have been warned over vehicle valuations and loan-to-value breaches, while inflation reached 7.3% after a roughly 47% fuel-price increase. Falling Treasury yields and ample liquidity are more supportive for financing conditions, but do not remove credit risk.

Outlook

The filing will show whether the June slowdown was limited to the structurally weakest net-margin quarter or extended into the following period. Falling market yields and improved liquidity provide a more supportive sector backdrop as at 2026-08-15, while the withdrawn debenture leaves funding execution an important unresolved issue. The current data cannot establish whether the lower earnings trend has persisted beyond June.

About this report. Generated on Aug 15, 2026 from market data up to Aug 14, 2026, 7 material news articles over 90 days and financials to Jun 30, 2026. Every figure is drawn from EquityLK's own data on this company. AI research can contain errors, so treat it as a starting point, not investment advice.

Previous reports

Sep 3, 2026Aug 15, 2026Jul 30, 2026