Overview
Hayleys Fibre manufactures and exports coir fibre, pith, horticultural growing media and finished fibre products, supported by production facilities and overseas marketing offices. It also has domestic foam-mattress exposure and a jute geotextile joint venture.
The June quarter extended the operating recovery from the weak prior-year base: sales, operating profit and net profit all increased, while margins improved. The improvement is meaningful, but the balance sheet and cash-flow position remain less robust than the profit trend alone suggests.
Price performance
At LKR 175.00 on 4 September 2026, the share had risen 10.8% over one month against a 2.5% ASPI gain, and 28.2% over three months while the ASPI fell 1.8%. The one-year return was 173.4%, far ahead of the index's 4.7%.
The price closed at its 52-week high and at the top of its own range. Sixty-day volatility was 44.3% below its own one-year level, while 20-day trading volume was 5.2% above the recent 60-day norm.
Valuation
The recovery is already reflected in a valuation above the manufacturing peer group. HEXP trades at 20.54 times earnings versus a sector median of 12.22 times, and at 2.62 times book value versus 1.70 times. Its P/E is higher than 77% of the manufacturing companies with comparable earnings data, while its P/B is higher than 75% of peers.
Return on equity was 12.8% for the twelve months to June 2026, providing some support for the premium to book value, but this does not fully offset the higher peer multiples. The current dividend yield is 0.0%; the last recorded annual dividend declined from LKR 3.55 in FY2022 to LKR 2.50 in FY2023.
News and sentiment
Direct company coverage was normal rather than unusually heavy, with three material articles over the past 90 days, all classified neutral. Recent disclosures concerned board and committee changes, including the appointment of Anushka Wijesinha as an independent non-executive director on 2 September 2026.
Ruwan Rajapakse was appointed Managing Director and Executive Director effective 1 April 2026. No confirmed or undated corporate actions are recorded.
Financials
June-quarter revenue rose 34.0% year-on-year to LKR 2.27 billion, while operating profit increased 45.7% to LKR 193 million and net profit rose 39.8% to LKR 116 million. The twelve months to June 2026 produced revenue of LKR 7.47 billion, up 51.9% year-on-year.
Gross margin was 16.9% versus 16.8% a year earlier, operating margin was 8.5% versus 7.8%, and net margin was 5.1% versus 4.9%. Each margin ranked a middling third among seven comparable June quarters, despite being among the stronger levels in the broader quarterly record.
A LKR 77 million gap between operating and net profit shows that finance costs, tax and other non-operating items still absorb a sizeable share of operating earnings. Equity rose to LKR 1.92 billion from LKR 1.73 billion a year earlier, while shares outstanding remained at 24 million.
Risks
Leverage is the principal risk. Total debt was LKR 2.69 billion at June 2026; at the latest audited year-end, gearing was 147.4% of equity attributable to owners and interest cover was only 2.84 times. This leaves profitability exposed to financing costs and any disruption to export volumes or margins.
Cash generation is the second concern. Annual cash conversion was -0.72x and free cash flow was negative LKR 616 million for the year ended March 2026, so accounting profit was not matched by operating cash flow. The current ratio was 1.22, offering only a limited short-term liquidity buffer.
Minority shareholders received 35.3% of annual group profit, meaning group earnings do not all belong to HEXP shareholders. As at 5 September 2026, the manufacturing backdrop also included higher fuel costs and weaker July merchandise export conditions, which add input-cost and demand uncertainty for an export-oriented producer.
Outlook
As at 5 September 2026, the next material company event is the filing for the quarter ending 30 September 2026, expected between 12 November 2026 and 2 March 2027. It will supersede the June figures and show whether the recent revenue and profit recovery has continued while debt remains elevated.
The available data cannot establish order visibility, export pricing, raw-material availability or the timing of cash collection. As at 5 September 2026, those factors remain central to judging whether the earnings recovery can translate into stronger cash generation.