Overview
Teejay Lanka is a regional knit-fabric manufacturer supplying global apparel brands, with facilities in Sri Lanka and India and a multi-country operating footprint. The key change is earnings compression: FY2026 profitability collapsed and the March quarter showed thin operating margins despite decent gross margin, pointing to overhead and cost pressure.
Price performance
The share closed at LKR 30.10 as at 7 Aug 2026. It fell 35.9% over 1 year against the ASPI up 9.5%. Over 3 months it slipped 2.2% versus the index down 7.1%.
The price sits at 13.3% of its 52-week range, closer to the low. Volatility is broadly in line with its own year, and trading volume is notably quieter than its recent norm.
Valuation
It trades on a P/E of 397, the sector’s 100th percentile. P/B is 0.67, well below peers. The dividend yield is 7.7% and sits at the top of the sector.
The payout was LKR 2.35 per share in FY2025. It was LKR 0.75 in both FY2024 and FY2023.
News and sentiment
Coverage over the last 90 days is modest with 3 material articles: 2 negative, 1 neutral. On 24-25 June, articles reported FY2026 PAT of LKR 54.7 million on revenue of LKR 60.04 billion, citing weak global demand and pricing pressure. A board appointment was disclosed on 12 March. Tone is net negative.
Financials
March 2026 quarter profitability narrowed sharply: operating margin fell from 8.4% to 1.4%, the weakest March in 7 years. Net margin dropped to 1.4% from 5.2%, with revenue down 16.7% year-on-year.
For FY2026, net profit fell 98.1% year-on-year. Below the line was not the quarter’s driver, with minimal drag in March.
Risks
The lead risk is interest cover: FY2026 interest cover fell to 0.6x. Finance costs were LKR 741 million against operating profit of LKR 442 million, leaving little room for shocks.
Balance sheet leverage is moderate, with gearing at 23.1% of owners’ equity. Liquidity is reasonable with a current ratio of 1.89. Cash generation provides some cushion, with free cash flow of LKR 1.24 billion in FY2026.
Outlook
As at 7 Aug 2026 the next results (to 30 Jun 2026) are due, with the exchange’s expected-by date 26 Oct 2026. That print will show whether margin repair is underway after March’s weak operating result.
Backdrop factors are mixed: a 10% US tariff setting keeps Sri Lankan apparel on par with key rivals, while falling local rates are consistent with some relief to a heavy finance charge. Execution on costs and volumes is the near-term swing factor until the next filing arrives.