Overview
Hayleys is a diversified Sri Lankan holding group spanning consumer and retail, transport and logistics, manufacturing-linked exports, agriculture, energy and hospitality. The most important recent change is a sharp acceleration in June-quarter earnings, driven by stronger group revenue and operating profit, following a rights issue that expanded the equity base.
Price performance
At LKR 230.00 on 2 September 2026, the share had fallen 2.1% over three months, although this was less severe than the ASPI's 4.2% decline. Its 28.5% one-year return substantially exceeded the ASPI's 3.0% gain.
The price stood 79.1% of the way through its 52-week range. Recent volatility was below Hayleys' own one-year norm and 20-day trading volume was also below its 60-day norm, indicating quieter trading rather than a broad acceleration in activity.
Valuation
Hayleys trades at 10.9 times earnings, placing it at the 38th percentile among sector peers with available P/E data. Its 1.55 times book value is supported to an extent by a 13.7% return on equity, consistent with a business earning above its book base.
The 2.6% dividend yield sits below the sector median, while the dividend payout has been steady over the latest two financial years. The valuation is not demanding on earnings, but neither does the yield provide a strong income premium.
News and sentiment
Direct coverage has been normal rather than unusually elevated. Of 23 material articles over the past 90 days, 17 were positive, four negative and two neutral, led by reported June-quarter earnings growth, an S&P Global B+ foreign-currency rating, and logistics and engineering contract developments.
The completed rights issue went ex on 18 March 2026. The latest interim dividend went ex on 30 January 2026.
Financials
June-quarter revenue rose 37.3% year-on-year to LKR 179.3 billion. Operating profit increased 58.0% to LKR 14.0 billion, while net profit climbed 86.4% to LKR 5.9 billion. The stronger net-profit growth followed operating improvement, although LKR 8.1 billion was absorbed below operating profit by finance costs, tax and other items.
Gross margin was 22.3% versus 23.0% a year earlier, operating margin improved to 7.8% from 6.8%, and net margin rose to 3.3% from 2.4%. June is structurally Hayleys' weakest quarter for net margin, so the latest net-margin print should be assessed against comparable June periods; it ranks middling among those observations. Gross margin, however, was the weakest of eight comparable June quarters.
Equity increased to LKR 177.2 billion from LKR 148.3 billion a year earlier, while shares outstanding rose from 750 million to 795 million following the rights issue. This increase mechanically reduces per-share measures relative to absolute profit growth. Minority shareholders received a material 36.8% share of annual group profit, meaning group earnings are not wholly attributable to Hayleys shareholders.
Risks
Balance-sheet leverage is the principal risk. At March 2026, net debt was LKR 388.6 billion and gearing was 255.8% of equity attributable to owners, while operating profit covered finance costs only 2.48 times.
Liquidity was adequate but not ample, with a current ratio of 1.19. Cash conversion was negative 0.35 times in the latest audited year and free cash flow was negative LKR 47.8 billion, so reported operating profit did not translate into cash. Manufacturing, which accounts for the largest reported segment exposure, also faces softer merchandise-export conditions, while fuel-driven inflation raises cost and demand pressures in consumer retail.
Outlook
As at 2 September 2026, the next material event is the filing for the quarter ending 30 September 2026, expected between 12 November 2026 and 2 March 2027. It will show whether the June revenue and earnings acceleration persisted after the rights-funded expansion and acquisitions.
The data cannot establish the earnings contribution or cash requirements of recently announced contracts and logistics investments. Falling domestic yields may be favourable for financing conditions, but higher fuel costs, inflation and weaker merchandise-export conditions remain relevant external pressures across Hayleys' diversified operations.