Overview
Dipped Products is an export-oriented manufacturer of latex industrial and household gloves, with plantation interests adding diversification. Hand protection remains the principal business, supported by operations in Sri Lanka and Thailand and customers in more than 70 countries.
The most important change is the sharper June-quarter earnings performance, following a LKR 2.3 billion Kottawa expansion focused on automated, higher-value glove production. The annual result remains weaker, so the investment case currently rests on whether recent operating improvement can be sustained.
Price performance
The share closed at LKR 59.20 on 2026-08-12. It gained 0.5% over three months while the ASPI fell 6.9%, but remained down 2.6% over one year against a 9.0% ASPI gain.
The price sits 44.8% up from its 52-week low and 17.1% below its high. Recent volatility was 1.1% below DIPD's own one-year level, while 20-day volume was 30.6% below its 60-day average, indicating quieter trading rather than an unusually active move.
Valuation
DIPD trades below manufacturing peers on earnings and book value: its P/E of 10.07 compares with a sector median of 12.67, while its P/B of 0.989 compares with 1.8. The P/E and P/B sit at the 23rd and 22nd sector percentiles respectively, placing the stock toward the cheaper end of the group.
ROE was 10.1% for the audited year, which provides only moderate support for a re-rating. The 3.8% dividend yield is at the 75th sector percentile. The payout has risen from LKR 1.75 per share in FY2024 to LKR 1.90 in FY2025 and LKR 2.13 in FY2026, although the latest FY2027 record of LKR 0.37 is incomplete.
News and sentiment
Coverage was normal over the past 90 days, with six material articles: four positive, one negative and one neutral. Company news included the LKR 2.3 billion Kottawa expansion, confirmed interim dividends, and the 2026-08-12 report of June-quarter attributable profit rising 40.4% year-on-year to LKR 1.23 billion.
The latest article is newer than the filed financial data ending 2026-06-30, so it is an update on the same quarter rather than a forecast. The dividend ex-dates of 2026-07-09 and 2026-04-15 are confirmed and have passed.
Financials
June-quarter revenue rose 12.4% year-on-year and operating profit grew 17.6%, while net profit increased 35.3%. Gross margin was 20.7% versus 19.0% a year earlier, operating margin was 7.0% versus 6.7%, and net margin was 5.8% versus 4.8%. The latest quarter ranked 3rd of 7 comparable June quarters for gross margin, 4th of 7 for operating margin and 4th of 7 for net margin, so the improvement was solid but not historically exceptional.
The LKR 309 million gap between operating and net profit was smaller than the LKR 423 million comparable drag, meaning finance costs, tax, associates and foreign exchange absorbed less profit below operations. By contrast, audited FY2026 revenue grew 3.5% while net profit fell 8.2%, confirming that the annual picture was weaker before the latest quarter. The August 12 company report subsequently described attributable profit of LKR 1.23 billion and revenue of LKR 25.02 billion for June.
Equity attributable to owners reached LKR 35.82 billion in the latest quarter from LKR 32.97 billion a year earlier. Shares outstanding were unchanged at 598.6 million, so the latest EPS comparison was not mechanically affected by a share-count change.
Risks
The main risk is weaker cash backing for reported earnings. Annual cash conversion fell from 0.94 times to 0.56 times, and free cash flow moved from positive LKR 2.32 billion to negative LKR 4.03 billion, indicating that profit has not translated into cash after investment and working-capital demands.
Financing risk has also increased: gearing rose to 50.6% of owners' equity while interest cover was 6.78 times. Liquidity remains positive with a current ratio of 1.57, but the group has material minority interests, with 23.8% of annual profit attributable to non-controlling shareholders. Group profit therefore is not the same pot of earnings available to DIPD shareholders.
Outlook
As at 2026-08-12, the next specific test is the quarter ending 2026-09-30. The filing is expected between 2026-10-31 and 2027-01-26; it will show whether the June-quarter improvement reported on August 12 is continuing or whether the annual weakness remains the better guide.
The manufacturing backdrop combines export-sector expansion with labour shortages and higher fuel-import costs. Easing domestic market rates may reduce financing pressure across the market, but July inflation of 7.3% and fuel-price volatility remain cost risks. The available data cannot separate the Kottawa investment's contribution from broader operating factors.