Overview
Hayleys Fabric manufactures knitted and synthetic fabrics for global fashion brands, with production across Sri Lanka and an innovation-led product offering. The latest quarter marks a revenue stabilisation, but the company is converting that demand into substantially less operating and net profit than a year earlier.
Price performance
The share closed at LKR 29.40 on 2026-08-07. It fell 6.3% over three months and 34.4% over one year, compared with ASPI declines of 7.1% and a 9.5% gain over the same periods, respectively.
The price sits at 0.5% of its adjusted 52-week range, 38.3% below the high and 0.3% above the low. Recent volatility was 7.6% below the company’s own one-year level, while 20-day volume was 34.1% below its 60-day average. The supplied filings and news do not establish why the share has underperformed.
Valuation
The stock trades at 19.51 times earnings, placing it at the 73rd percentile of 23 manufacturing peers and above the sector median P/E of 12.51. Its P/B of 0.907 is much lower, at the 14th percentile versus a sector median of 1.81. ROE is not reported, so the low P/B cannot be reconciled with returns on equity from the supplied data.
The dividend yield is 1.6%, at the 32nd sector percentile and below the 3.2% sector median. The payout has declined across the recorded history, from LKR 1.85 per share in FY2025 to LKR 0.62 in FY2026; FY2027 shows LKR 0.11 so far and may be incomplete. Current payout is covered 3.14 times by earnings.
News and sentiment
Three material articles appeared in the 90-day window, split between one positive and two negative items. The negative coverage included a textile peer reporting a 98% profit decline amid weak global demand, tariffs, pricing pressure and lower volumes, while the positive item concerned Hayleys PLC’s wider group performance rather than Hayleys Fabric specifically.
The company’s confirmed first interim dividend was LKR 0.11 per share, with an ex-date of 2026-07-09 and payment on 2026-07-21. No undated corporate actions are recorded.
Financials
In the quarter ended 2026-06-30, revenue rose 4.0% year on year to LKR 10.90 billion, but operating profit fell 42.0% to LKR 459 million and net profit fell 57.1% to LKR 169 million. Gross margin narrowed from 17.1% to 16.3%, operating margin from 7.5% to 4.2%, and net margin from 3.8% to 1.6%.
The latest gross margin ranked 4th of six comparable June quarters, while operating margin was the worst of five and net margin the worst of six. This places the operating result among the company’s weakest comparable periods, rather than showing a normal quarter-to-quarter fluctuation. The LKR 290 million gap between operating and net profit also shows a substantial drag from finance, tax and other below-the-line items.
For FY2026, revenue fell 13.3% to LKR 38.27 billion and net profit fell 69.8% to LKR 642 million. These full-year figures and the latest quarter are on the same group basis, with 415.5 million shares outstanding; no share-count change is indicated in the supplied data.
Risks
The largest balance-sheet risk is leverage: total debt was LKR 46.0 billion at FY2025, equal to 121.8% of owners’ equity. Debt and gearing for FY2026 are not disclosed, so the latest financing position cannot be confirmed.
Interest cover, the current ratio and cash conversion are not reported. This prevents a check on whether the recent profit reduction is accompanied by adequate operating cash generation or whether liquidity has improved. A further earnings risk is the persistent below-the-line drag, which reduced the latest LKR 459 million operating profit to LKR 169 million of net profit.
The manufacturing backdrop adds pressure through reported labour shortages and higher energy and input costs. Recent easing in interest rates is a favourable wider-market condition, but the supplied data does not show that it has reduced Hayleys Fabric’s financing burden.
Outlook
The next specific information point is the quarter ending 2026-09-30. As at 2026-08-08, the filing is expected between 2026-10-28 and 2027-01-26; it will show whether the latest operating weakness has persisted beyond the quarter already reported.
That filing matters because revenue has recovered while margins and earnings have not. The available data cannot distinguish whether the weak June operating result reflects customer pricing, product mix, input costs or company-specific execution. Export-sector labour constraints and energy-cost pressure remain relevant external conditions, while lower rates may provide some offset, but neither effect is yet evidenced in Hayleys Fabric’s own results.