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Singer (Sri Lanka) PLC: research report

Fairly valuedneutralSep 30, 2026

Evidence is balanced: June operating profit grew 60.8%, but debt equals 399.4% of owners' equity. Stronger margins and profit contrast with cash not backing earnings.

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Why balanced

  • June operating profit rose 60.8% year-on-year, with operating margin among Singer's best June-quarter results.
  • Net margin of 5.8% was the best of the seven comparable June quarters on record.

Against this. Debt equalled 399.4% of owners' equity at the latest audited year-end, leaving the business highly geared.

Operating margin
12.4%sector 9.0%
from 10.9% a year earlier
Net margin
5.8%sector 7.3%
from 5.6% a year earlier, revenue +40.7%
Return on equity
37.2%
twelve months to Jun 30, 2026, unaudited
P/E
11.2sector 13.3
earnings Rs 6.85 per share
P/B
4.15sector 1.66
book Rs 18.41 per share
Dividend yield
2.64%sector 1.72%
29.5% of earnings paid out

Current figures, updated daily from filings to Jun 30, 2026. The report below was written on Sep 30, 2026. Sector figures are the median of 35 listed companies in the same sector.

Overview

Singer is an integrated Sri Lankan retailer, distributor and manufacturer of consumer durables, supported by finance, service-centre and nationwide retail operations. The latest June quarter continued the recovery in sales and profitability, with stronger operating performance flowing through to higher earnings, but the business remains financed with substantial debt and working-capital demands.

Price performance

At LKR 76.40 on 30 September 2026, the share outperformed the ASPI by 10.3 percentage points over three months. It sits below the midpoint of its 52-week range, while recent volatility has been materially quieter than its own one-year norm.

The record since October 2023 shows five material falls, the deepest 38%, which has not yet recovered. Median daily turnover was LKR 7.8 million; a LKR 1 million order is about 13% of what trades on a typical day, a noticeable part of a day's trading.

Valuation

The P/E is 11.2 times, meaning the price pays about 11 rupees for every rupee of trailing profit, versus a sector median of 13.5 times. The P/B is 4.15 times, or just over four rupees for each rupee of net assets, and sits at the 74th percentile of consumer-retail peers. A trailing ROE of 37.2% helps explain why the shares trade well above book value.

The shares were more expensive on P/E than at eight of the last 12 year-ends, and more expensive on P/B than at 11. This makes the relatively modest earnings multiple dependent on the current high return on equity rather than on a low price to book. The latest quarter supplied 26.9% of trailing EPS, although its 5.8% net margin was close to the year-ago 5.6%, leaving the P/E unchanged at 11.2 times on that comparison.

The 2.6% dividend yield is close to the sector median. DPS rose from LKR 0.98 in FY2025 to LKR 1.84 in FY2026; FY2027 has so far recorded LKR 0.84, and is incomplete.

News and sentiment

Coverage was about normal, with three material articles in the last 90 days: two positive and one neutral. Results reported on 11 August confirmed June-quarter profit growth, while the LKR 630 million ACME factory acquisition, reported in April and transferred in July, is less than 1% of trailing revenue and is therefore a small addition to the existing manufacturing base.

A second interim dividend of LKR 0.34 has a confirmed ex-date of 9 October 2026 and payment date of 22 October 2026.

Financials

June-quarter revenue grew 40.7% year-on-year to LKR 38.7 billion and net profit rose 44.3% to LKR 2.2 billion. Profit grew more slowly than operating profit, which rose 60.8%, because finance costs, tax and other below-the-line items absorbed LKR 2.6 billion.

Gross margin was 32.1% versus 31.7% a year earlier, operating margin was 12.4% versus 10.8%, and net margin was 5.8% versus 5.6%. Operating margin was the second-best among seven comparable June quarters, while net margin was the best, showing that the profit improvement included genuine operating leverage rather than only lower below-the-line costs.

Equity rose to LKR 23.5 billion from LKR 17.1 billion a year earlier. Shares outstanding remained 1.17 billion, so the earnings improvement was not mechanically diluted by a change in ordinary share count.

Risks

Leverage is the central risk. At the March 2026 audited year-end, debt was LKR 79.6 billion, equal to 399.4% of owners' equity, although operating profit covered the interest bill 4.18 times. This leaves a large creditor claim ahead of ordinary shareholders' equity.

The current ratio was 1.16 times, meaning short-term assets, including inventory and customer receivables, were only modestly above bills due within a year. More importantly, operating cash flow was negative against operating profit, producing cash conversion of -2.79 times and free cash flow of negative LKR 43.1 billion. Reported profit therefore did not arrive as cash during the audited year.

Consumer retail is also operating amid accelerating inflation and higher energy costs as at 30 September 2026, conditions that can pressure household purchasing power. The group’s financing arm and retail inventory model make working-capital discipline especially important in that backdrop.

Outlook

As at 30 September 2026, the next measurable catalyst is the interim filing for the quarter ending that date, expected between 6 and 14 November. It will show whether the June improvement in sales, margins and cash demands continued into the following quarter.

The confirmed LKR 0.34 dividend goes ex on 9 October 2026, so only buyers before that date receive it. The available data cannot establish whether the small acquired factory will materially lift manufacturing earnings or whether higher consumer-cost pressures have changed Singer’s trading conditions.

About this report. Generated on Sep 30, 2026 from market data up to Sep 30, 2026, 3 material news articles over 90 days and financials to Jun 30, 2026, and scored 42 of 100 on value (fairly valued) 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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