Overview
Hayleys is a diversified Sri Lankan holding group spanning manufacturing, consumer and retail, logistics, engineering, renewable energy and export businesses. The latest June quarter combined faster revenue growth with stronger operating profitability, but the group remains heavily funded by debt and its profits are not fully reflected in cash generation.
Price performance
At LKR 231.00 on 3 September 2026, Hayleys had fallen 1.8% over three months against a 3.5% decline in the ASPI, while its 28.4% one-year return exceeded the index's 3.3% gain. The share stood at 80.1% of its 52-week range. Both 60-day volatility and recent trading volume were below the company's own longer-term norms.
Valuation
The 10.9 P/E sits at the 38th percentile among reporting diversified-holdings peers, while the 1.56 P/B is supported in part by trailing ROE of 13.7%. The 2.6% dividend yield is modest, and the dividend has held at LKR 5.99 per share in both FY2025 and FY2026.
News and sentiment
Coverage is about normal for Hayleys, with 8 articles in the past 30 days against a monthly baseline of 6. Of 26 material articles over 90 days, 19 were positive, 4 negative and 3 neutral. The flow included a B+ foreign-currency rating from S&P, strong June-quarter results and project delivery updates. The 18 March 2026 rights issue is a confirmed past corporate action.
Financials
June-quarter revenue, operating profit and net profit all grew year-on-year, with profit growth outpacing sales. Gross margin slipped to 22.3% from 23.0%, while operating margin widened to 7.8% from 6.8% and net margin increased to 3.3% from 2.4%.
June is structurally Hayleys' weakest quarter for net margin, so the lower sequential margin profile is not itself evidence of deterioration. However, gross margin was the weakest among comparable June quarters on record. Finance costs, tax, associates and other below-the-line items continued to absorb a substantial share of operating profit.
Risks
Funding risk is the principal concern: total debt was LKR 289.7 billion and net debt LKR 388.6 billion at the latest audited year-end, producing gearing of 255.8% of equity attributable to owners. Operating profit covered finance costs only 2.48 times.
Liquidity was adequate but not ample, with a current ratio of 1.19. Annual cash conversion was negative at -0.35 times, indicating that reported operating profit did not translate into operating cash flow. Minority shareholders also have a material claim on group earnings, so group profit is not wholly attributable to Hayleys PLC shareholders.
Outlook
As at 3 September 2026, the September quarter was still running. The next filing, covering the period ending 30 September 2026, is expected between 12 November 2026 and 2 March 2027; it will clarify whether the June-quarter earnings momentum is being converted into cash while debt remains elevated.
The operating backdrop is mixed. Manufacturing represents the largest reported segment exposure and recent export conditions have been uneven, while higher inflation and fuel costs pressure consumer and retail activity. Logistics conditions have been more constructive through higher Colombo Port throughput. The available data cannot determine the earnings contribution or funding impact of recently reported projects and acquisitions.