Overview
Haycarb manufactures coconut-shell activated carbon for global industrial applications and provides water and wastewater purification systems through Puritas. The central change is that revenue and operating profit recovered strongly in the latest June quarter, but this has been accompanied by a much more debt-funded balance sheet and weaker conversion of accounting profit into cash.
Price performance
At LKR 210 on 30 September 2026, the share was up 130.5% over one year while the ASPI fell 0.7%, a wide divergence without a company-specific explanation in the supplied news flow. It stood 94.2% of the way from its 52-week low to high, so the recent advance has already placed it near the top of its own annual range.
Trading activity has cooled, with 20-day volume 12.5% below its 60-day norm, while 60-day volatility was broadly unchanged from its own one-year level. Median daily turnover was LKR 23.3 million; a LKR 1 million order is about 4.3% of what trades on a typical day, a small part of a day's trading. The three-year record shows two falls of 15% or more, the deepest 18%, which took three months to recover.
Valuation
The P/E of 14.9 times means the market price represents 14.9 rupees for each rupee of trailing profit, placing Haycarb at the 68th percentile of 23 manufacturing peers with reported P/E figures. The trailing return on equity is 13.6%, which supports a premium to book only while earnings and equity returns remain intact.
Its P/B of 2.02 times means paying just over two rupees for each rupee of net assets, at the 64th percentile of 29 manufacturing peers. More importantly, it is more expensive than 93% of days since February 2012. A buyer at this price relies partly on the latest quarter, which supplied 26.3% of trailing EPS; at the year-ago net margin, the P/E would be 15.7 times.
The dividend yield is 2.1%. DPS rose from LKR 3.80 in FY2025 to LKR 4.07 in FY2026, while the LKR 1.75 recorded so far for FY2027 is incomplete and should not be read as a cut.
News and sentiment
Direct coverage is normal rather than unusually loud, with 9 material articles over 90 days: 6 positive, 2 negative and 1 neutral. The key company development was an LKR-equivalent undisclosed revenue opportunity from the US$18.18 million Energy Storage Carbon expansion reported on 2 June; the investment amount is stated, but expected sales and profit terms are not.
The confirmed second interim dividend is LKR 1.00 per share, with an ex-date of 9 October 2026 and payment on 22 October 2026. Only a buyer before the ex-date receives it.
Financials
June-quarter revenue rose 44.7% year-on-year and operating profit rose 138.0%, while net profit increased 83.1%. Gross margin was 19.8% versus 19.5% a year earlier, operating margin was 11.5% versus 7.0%, and net margin was 6.3% versus 4.9%. The operating improvement therefore came from both higher sales and a much larger share of those sales reaching operating profit.
The margin recovery remains incomplete against Haycarb's own record. June gross margin ranked 6th of 7 comparable June quarters, and net margin also ranked 6th of 7. Finance costs, tax and other items below operating profit absorbed LKR 1.0 billion, up from LKR 281 million a year earlier, limiting how much of the operating gain reached shareholders.
Equity rose to LKR 35.0 billion from LKR 30.9 billion a year earlier, while shares outstanding were unchanged at 297.1 million. Minority shareholders received 16.6% of FY2026 group profit, so group net profit includes earnings that do not belong to the ordinary shares being valued. The latest filed quarter ends 30 June 2026; the next results will supersede this historical picture.
Risks
The main risk is the sharp increase in leverage. At March 2026, total debt was LKR 18.2 billion and gearing, debt against owners' equity, was 62.1%, versus 22.3% a year earlier. Operating profit covered the interest bill 7.0 times, better than 4.8 times a year earlier, but the larger debt base leaves earnings more exposed if operating conditions soften.
Liquidity has also narrowed: the current ratio, short-term assets including inventory and receivables against bills due within a year, fell to 1.74 times from 2.47 times. Annual operating cash flow was negative relative to operating profit, with cash conversion of -0.8 times and free cash flow of negative LKR 9.7 billion. The profit increase therefore had not arrived as cash at the latest annual filing.
Manufacturing export conditions weakened in August, including coconut-based product shipments, while oil-price swings add uncertainty around energy and transport costs. This is sector context, not evidence of a reported Haycarb deterioration.
Outlook
As at 30 September 2026, the next concrete information point is the interim quarter ending that day, expected to be filed between 6 and 14 November. It will show whether the June revenue and operating-margin improvement has continued and whether cash generation has caught up with profit.
The Philippines facility's first phase was reported on 2 June as targeted for H1 2027, but the supplied data does not state its expected revenue or profit contribution. As at 30 September, the confirmed LKR 1.00 dividend is also due to go ex on 9 October; it changes who receives the payment, not the company's earning power.