Overview
Hayleys is a diversified Sri Lankan group with domestic and export operations spanning consumer and retail, transportation and logistics, manufacturing-linked businesses, agriculture, renewable energy and hospitality. The June quarter marked a stronger operating print, led by expanding sales and improved conversion into profit, although the group remains capital intensive and carries substantial minority interests.
Price performance
At LKR 230.00 on 14 September 2026, the share had gained 32.0% over one year against a 1.2% ASPI gain, while its 1.5% six-month fall was smaller than the index's 6.1% decline. It sat in the upper fifth of its 52-week range. Recent volatility was below its own one-year norm and trading volume was below the preceding 60-day pace, indicating calmer but quieter trading.
The record shows three falls of 15% or more in three years, the deepest 26%, which took nine months to recover. Median daily turnover was LKR 9.9 million; a LKR 1 million order is about 10% of what trades on a typical day, a noticeable part of a day's trading.
Valuation
The P/E of 10.8 times means the market price is LKR 10.8 for every LKR 1 of trailing profit, below the diversified-holdings median of 13.6 times. The P/B of 1.55 times means LKR 1.55 is paid for each LKR 1 of net assets, above the sector median of 1.22 times; the group's 13.7% trailing return on equity helps explain why its book value attracts a premium.
Sector positioning is middling rather than extreme, at the 44th percentile for P/E, 60th for P/B and 44th for dividend yield. However, the share is more expensive than 86% of days since January 2019 on P/B, so the present price is elevated against its own book-value record. A buyer at this price is relying partly on the latest quarter, which supplied 21.5% of trailing EPS; at the year-ago net margin, the same price would equate to 11.5 times earnings.
The 2.6% dividend yield is slightly below the sector median. The payout has been steady at LKR 5.99 per share in FY2025 and FY2026, following LKR 5.34 in FY2024, and trailing earnings covered the payout 3.54 times.
News and sentiment
Coverage was normal rather than unusually loud, with six articles in the last 30 days against a monthly baseline of 5.7. Of 27 material articles over 90 days, 18 were positive and five negative.
Company news included S&P Global Ratings assigning a B+ foreign-currency rating with a stable outlook on 19 August, and June-quarter results reported on 12 and 13 August. Sri Lanka Shipping Company also secured a USD 17.16 million, five-year tug-vessel lease contract in July, but the disclosure does not state Hayleys' profit contribution. The 3:50 rights issue went ex on 18 March at LKR 200, a 2.4% discount to the prior close; holders who did not subscribe were diluted.
Financials
June-quarter revenue rose 37.3% year-on-year to LKR 179.3 billion, while group net profit increased 86.4% to LKR 5.9 billion. Operating profit grew 58.0%, faster than sales, so the quarter produced more operating earnings from each rupee of revenue.
Gross margin was 22.3% versus 23.0% a year earlier, operating margin was 7.8% versus 6.8%, and net margin was 3.3% versus 2.4%. June has been Hayleys' weakest quarter for net margin on average over the five complete years on record; the latest net margin was nonetheless middling, ranking third of eight comparable June quarters. Gross margin was the weakest of eight comparable June quarters, showing that improved operating and net results did not come from stronger gross profitability.
LKR 8.1 billion of operating profit was absorbed below the operating line by finance costs, tax, associates and other items, limiting the profit ultimately available. The March rights issue increased shares outstanding from 750 million to 795 million, so per-share measures should be read alongside the rise in absolute group earnings. At the latest annual reporting date, 36.8% of group net profit belonged to minority shareholders rather than Hayleys voting shareholders.
Risks
The main risk is leverage. 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. This leaves a relatively narrow earnings buffer against higher funding costs or weaker operating profit.
The current ratio was 1.19 times, meaning the group had LKR 1.19 of assets expected to turn into cash within a year, including inventories and customer receivables, for every LKR 1 of bills due within that year. Annual operating cash flow was negative against operating profit, producing cash conversion of -0.35 times and free cash flow of negative LKR 47.8 billion; the reported profit did not translate into cash during that period.
Manufacturing represented 40% of reported segment revenue and consumer retail 34%. As at 14 September 2026, weaker merchandise-export conditions, 8.0% inflation and higher oil prices formed a tougher backdrop for these larger exposures, while transport and logistics faced both service-export growth and higher fuel-related costs.
Outlook
As at 14 September 2026, the next dated catalyst is the interim quarter ending 30 September, expected to be filed between 6 and 14 November. It will show whether the June sales acceleration is being sustained and whether the rights-issue proceeds and new debt funding are changing the group's funding burden.
The current data cannot separate the earnings contribution of the tug-vessel lease, solar projects, logistics acquisitions or engineering contracts. It also cannot establish whether the June gross-margin weakness is temporary or linked to the group's cost base; the next filing is the first common update for those questions.