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Singer Finance (Lanka) Plc: research report

Moderately undervaluedbullishSep 25, 2026

Evidence points bullish: June net profit rose 53.9% year-on-year on record June margins. The catch is an 8:29 rights issue at LKR 39.20, which will dilute non-participating holders.

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Why bullish

  • June-quarter net profit rose 53.9% year-on-year, while its 17.9% net margin was the best of seven comparable June quarters.
  • The twelve months to June 2026 produced a 17.7% return on equity, showing that the enlarged lending book is generating a meaningful return for ordinary shareholders.
  • The planned rights issue is priced at LKR 39.20 and is intended to strengthen capital adequacy and fund lending, supporting balance-sheet capacity for the business.

Against this. The 8-for-29 rights issue will increase the ordinary share count, diluting holders who do not take up their entitlement.

Operating margin
41.8%sector 40.4%
from 41.4% a year earlier
Net margin
17.9%sector 17.8%
from 16.8% a year earlier, revenue +44.4%
Return on equity
17.7%
twelve months to Jun 30, 2026, unaudited
P/E
7.6sector 6.9
earnings Rs 6.07 per share
P/B
1.31sector 0.94
book Rs 35.36 per share
Dividend yield
2.16%sector 2.16%
16.5% of earnings paid out

Current figures, updated daily from filings to Jun 30, 2026. The report below was written on Sep 25, 2026. Sector figures are the median of 54 listed companies in the same sector.

Overview

Singer Finance is a non-bank lender focused on lending, leasing, deposits and vehicle finance. The latest June quarter extended a strong earnings expansion, with both operating and net profit growing faster than revenue and margins reaching the best comparable June-quarter levels on record.

The business is simultaneously enlarging its funding and capital base. The confirmed rights issue is intended for capital adequacy and lending, making the capacity to deploy that new capital productively central to the company’s financial case.

Price performance

At LKR 47.00 on 25 September 2026, the share had fallen 9.8% over three months, compared with a 5.3% decline in the ASPI over the same period. It sits near the lower end of its 52-week range, while recent volatility has been below its own one-year norm.

The three-year record contains four falls of 15% or more, with the deepest at 51% and not yet recovered. This is a share with a documented history of sizeable retreats rather than a smooth trading record.

Median daily turnover was LKR 542,239 over the past 60 sessions, and a LKR 1 million order is more than everything that trades on a typical day, 184% of it. Building or exiting even a modest position can therefore represent a large part of normal daily trading.

Valuation

The share trades on 7.7 rupees for every rupee of trailing profit and 1.33 rupees for every rupee of net assets. Its 17.7% return on equity helps explain why the P/B sits above the finance-sector median, rather than making that premium a standalone concern.

The P/B is at the 65th percentile among 53 finance peers, so it is above much of the sector but not at an extreme. Against its own record, however, it is more expensive than 82% of days since January 2019. A buyer at this price is relying on the latest quarter, which supplied 23.8% of trailing EPS, maintaining a net margin close to its year-ago level.

The 2.1% dividend yield is modest for the sector. The latest LKR 1.00 payout follows years for which no dividend is recorded after FY2022, so the yield does not evidence a consistently recurring distribution record.

News and sentiment

Coverage has been unusually heavy, with five material articles in the last 30 days, or 2.5 times Singer Finance’s normal monthly rate. Of ten material articles over 90 days, four were positive and six neutral.

The substantive item is the confirmed rights issue: reporting on 25 September gave an ex-date of 16 October for an 8-for-29 issue at LKR 39.20 per share. Board and committee changes, including Jonathan Alles becoming chairman effective 12 September, were also reported, but the disclosures provide no quantified earnings effect.

Financials

June-quarter revenue rose 44.4% year-on-year to LKR 2.6 billion and net profit rose 53.9% to LKR 466 million. Profit therefore grew faster than lending income, leaving more profit attributable to each ordinary share.

Gross margin is not applicable from the available lender financial presentation. Operating margin widened from 41.4% to 41.8%, while net margin rose from 16.8% to 17.9%; both were the best of seven comparable June quarters. The LKR 621 million gap between operating and net profit still shows the weight of finance costs, tax and other below-operating items.

Equity reached LKR 9.8 billion at June, with 277.9 million shares outstanding, unchanged from the latest balance-sheet count. The twelve months to June 2026 delivered 48.9% revenue growth and a 17.7% return on equity, though these are reconstructed from interim filings rather than an audited full year.

Risks

The leading risk is balance-sheet leverage inherent in a fast-growing lender. Total liabilities were 9.04 times equity at the March 2026 year-end, up from 8.36 times a year earlier, meaning lenders and depositors provide far more of the funding base than ordinary shareholders.

The forthcoming 8-for-29 rights issue directly addresses capital capacity but also changes the claim on future profits for holders who do not participate. Its LKR 39.20 issue price is below the 25 September market price, making the dilution question concrete rather than theoretical.

Sector conditions add a funding-risk backdrop: Treasury-bill yields had risen after an 11-week decline as at 25 September 2026. That is relevant to lending and deposit pricing across finance companies, although the available data does not quantify the effect on Singer Finance specifically.

Outlook

As at 25 September 2026, the next confirmed company event is the rights issue ex-date on 16 October. It will add capital intended for lending and capital adequacy, but will also enlarge the ordinary share base, so subsequent per-share outcomes depend on deployment of the additional funds.

The next operating update is the September 2026 interim quarter, expected between 6 and 14 November. It will supersede the June-quarter figures and show whether the record June margins and rapid lending-income growth continued after the capital-raising decision. The available data cannot determine the credit quality or returns on lending funded by the new capital.

About this report. Generated on Sep 25, 2026 from market data up to Sep 25, 2026, 10 material news articles over 90 days and financials to Jun 30, 2026, and scored 72 of 100 on value (moderately undervalued) when it was written. Every figure is drawn from EquityLK's own data on this company. AI research can contain errors, so treat it as a starting point, not investment advice.

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