Overview
Senkadagala Finance is a licensed finance company focused on leases, hire purchase and loans to MSMEs and asset‑backed retail borrowers, with deposit funding and a small non‑banking suite (insurance broking, asset management, margin trading associate). The most material recent change is scale and capital: FY26 was a record profit year, and a January rights issue strengthened the balance sheet, with reported capital adequacy of 23.84%. The cadence into year‑end is the watch‑item: the December quarter softened even as the full‑year outcome looked strong.
Price performance
The share fell 67.5% over six months versus the ASPI’s -11.3%, and is down 22.6% over three months versus the index’s -6.5%. On one year it is -20.6% against the ASPI’s +9.3%. The price now sits at the 52‑week low of LKR 353 (high LKR 1,593). Returns within this window are affected by a 1:20 rights issue at LKR 240 (ex 20 Jan 2026); restated series reflect the dilution, while as‑traded returns diverge for mechanical reasons rather than performance. Liquidity is thin, with 20‑day average volume around 941 shares.
Valuation
SFCL trades at P/E 15.47 and P/B 2.44, a premium to sector medians of 7.43 and 1.0. On sector percentiles it screens expensive (P/E 82nd, P/B 96th). The dividend yield is 0.8% versus the sector’s 3.6%. ROE at 15.7% helps reconcile the premium (P/B roughly equals ROE times P/E), but the premium remains high relative to peers.
News and sentiment
Coverage has been about normal and skewed positive (4 positive, 3 neutral in the last 90 days). Corporate actions: a final dividend of LKR 2.8 per share (XD 2026‑07‑31, payable 2026‑08‑19), and a 1:20 rights at LKR 240 in January. There was a trading halt pending disclosure on 2026‑06‑15 and a subsequent board refresh effective 1 April. A July article highlighted a record FY26 profit, consistent with the filed headline numbers.
Financials
Latest filed quarter (to 31 Dec 2025) saw a step‑down: revenue fell 11.9% year‑on‑year and net profit fell 40.5%. Operating margin compressed sharply (down 31.3 points) and net margin was 21.3%, among its weakest December prints. Below the line remained a meaningful drag at LKR 307 million (finance costs, tax and other items). For FY26 the group reported a record net profit of LKR 2.05 billion and total assets of LKR 57.64 billion. The January rights issue increased the share count modestly, so per‑share trends should be read alongside absolute earnings.
Risks
Regulatory tightening in motor lending is a live sector headwind, with CBSL warning on inflated vehicle valuations and LTV breaches; AML scrutiny has also risen. The stock’s valuation premium leaves less room for error if growth slows. Trading liquidity is low (c. 941 shares a day), and the December quarter’s weaker print highlights execution and credit‑cost risk; while easing market rates should help funding costs, that benefit may arrive with a lag.
Outlook
As at 6 Aug 2026 the exchange still flags the FY26 filing as overdue; the audited annual report is the next catalyst and should clarify the March quarter run‑rate and capital metrics, while the final dividend is due for payment on 19 Aug 2026. A cleaner March quarter print that reverses December’s profit dip would ease valuation tension; if not, the current sector‑high multiples look vulnerable.