Overview
Hayleys is a diversified Sri Lankan group spanning consumer and retail, logistics, export-oriented manufacturing, agriculture, renewable energy, engineering and hospitality businesses. The June quarter showed materially faster revenue and operating-profit growth, with the improvement flowing through to net profit despite a larger finance-cost burden.
The March rights issue added capital and lifted ordinary shares in issue from 750 million on the latest annual balance sheet to 795 million today. That strengthened the equity base, but the group remains heavily financed by debt.
Price performance
The voting share closed at LKR 225.00 on 25 September 2026. It fell 3.6% over three months against a 5.3% ASPI decline, while its 30.9% one-year gain exceeded the index's 3.4% return; recent relative performance has therefore remained ahead of the broader market despite the quarterly retreat.
The price stands 73.0% of the way from its 52-week low to high, and both recent volatility and trading volume are below Hayleys' own longer-run norms. The three-year record contains three falls of 15% or more, the deepest 24%, which took seven months to recover. Median daily turnover was LKR 9.4 million; a LKR 1 million order is about 11% of what trades on a typical day, a noticeable part of a day's trading.
Valuation
At 12.0 times trailing earnings, the share represents 12 rupees paid for every rupee of the last twelve months' profit. Its P/B of 1.52 means paying LKR 1.52 for each rupee of net assets, while trailing ROE was 13.7% and the dividend yield was 2.7%. P/E and dividend yield both sit at the 44th percentile within the relevant peer samples, while P/B is at the 60th percentile, leaving the sector comparison broadly middle-of-the-pack.
The company's own record is less accommodating: P/B is more expensive than 83% of days since January 2019, and P/E is more expensive than 67% of days since January 2019. The dividend has held at LKR 5.99 per share in FY2025 and FY2026 after LKR 5.34 in FY2024, so the current yield rests on a payout that has recently been steady.
A buyer at this price is relying partly on the latest quarter, which supplied 21.5% of trailing EPS. If that quarter had earned its year-ago net margin on the same revenue, P/E would be 12.7 times rather than 12.0 times.
News and sentiment
Direct coverage was normal rather than unusually intense, with 32 material articles over 90 days: 21 positive, seven negative and four neutral. The June-quarter results, reported on 12 and 13 August, documented stronger logistics, consumer and retail, and export-oriented operations.
Reported developments include S&P Global Ratings assigning a B+ foreign-currency rating with stable outlook on 19 August, and a USD 17.16 million five-year tug-vessel lease contract reported on 22 July. The disclosed dollar contract value cannot be directly sized against group revenue without a supplied currency conversion. Against this, the agreed Maldivian-resort disposal was reported on 1 June alongside LKR 6.9 billion of impairment and a LKR 1.23 billion discontinued-operations loss.
Financials
For the June 2026 quarter, revenue rose 37.3% year-on-year to LKR 179.3 billion and net profit rose 86.4% to LKR 5.9 billion. 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%. Thus, stronger conversion below gross profit, rather than gross-margin expansion, drove the large profit increase.
June has been Hayleys' weakest quarter for net margin on average over the five complete years on record. On a like-for-like June basis, the 3.3% net margin was middling, third of eight observations, while gross margin was the worst of eight Junes. The seasonal context means the lower net margin than the March quarter is not, by itself, evidence of a deterioration.
Operating profit increased 58.0%, but LKR 8.1 billion was absorbed below operating profit by finance costs, tax, associates and other items. Group net profit also includes earnings not fully attributable to Hayleys shareholders: minority interests received 36.8% of annual profit at March 2026. The latest quarter is historical as of 30 June; no later reporting-period result is present in the news flow.
Risks
Balance-sheet leverage is the central risk. At the March 2026 annual filing, debt stood at 255.8% of equity attributable to owners, and interest cover was 2.48 times, meaning operating profit covered the interest bill fewer than two and a half times. 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; reported accounting profit therefore did not arrive as cash in that year.
Liquidity was adequate but not ample, with a current ratio of 1.19 times. This means the group had LKR 1.19 of short-term assets, including inventory and customer receivables, for every LKR 1.00 of bills due within a year.
The operating backdrop also has mixed exposures. Manufacturing accounts for about 40% of reported segment revenue and faces weaker August export shipments and volatile energy costs, while consumer and retail, about 34%, faces household-budget and distribution-cost pressure. These are sector conditions, not evidence of a reported effect on Hayleys.
Outlook
As at 26 September 2026, the next material event is the September interim-quarter filing, expected between 6 and 14 November. It will show whether the June improvement in operating profit and the enlarged share base are being matched by cash generation and whether debt servicing remains manageable.
The supplied data cannot establish the earnings contribution from recent solar, engineering and logistics projects, nor can it show how higher market interest rates or oil prices will affect Hayleys specifically. The next filing is therefore the first scheduled evidence that can update the present balance between stronger operations and a leveraged balance sheet.