Overview
Vidullanka operates renewable generation, EPC and engineering businesses across hydro, solar and dendro projects in Sri Lanka and overseas. The key change is a sharp June profit improvement alongside a shift toward solar and grid-scale battery storage, extending the company beyond its established generation portfolio.
The valuation band starts neutral at fairly valued, but the profit acceleration and sized project pipeline move the assessment to bullish. That conclusion depends on execution because the expansion is being funded alongside a marked increase in borrowings.
Price performance
At LKR 21.80 on 17 September 2026, VLL was up 21.1% over one year while the ASPI gained 0.1%, showing a materially stronger year than the wider market. It stood 38.3% of the way from its 52-week low to high, leaving it below the midpoint of its own annual trading range.
Trading volume over the latest 20 sessions was more than double the preceding 60-session norm, while 60-day volatility was about half its own one-year rate. The record shows two falls of 15% or more in three years, the deepest 35%, which has not yet recovered. Liquidity remains limited: a LKR 1 million order is more than everything that trades on a typical day (137% of it).
Valuation
At 12.9 times P/E, the voting share costs LKR 12.90 for every LKR 1 of trailing profit, below the power and energy peer median of 27.31 times. Its 2.19 times P/B means LKR 2.19 for each LKR 1 of net assets, modestly above the 1.83 times sector median; its return on equity of 16.9% helps explain why it trades above book value.
The P/B sits at the 78th percentile among 10 sector peers, so the premium to book is relatively high even though earnings are cheaper than the peer set. The share was more expensive on P/E at 8 of 12 recorded year-ends and on P/B at 10 of 12, placing today's valuation toward the upper end of its own record.
A buyer at this price is relying materially on the latest June quarter: it supplied 30.7% of trailing EPS, and at its year-ago margin the P/E would be 14.8 times. The 2.3% trailing dividend yield is supported by a 29.6% payout ratio, but the payout history has moved down from LKR 1.58 in FY2025 to LKR 0.65 in FY2026; FY2027 currently records LKR 0.20 and remains incomplete.
News and sentiment
Coverage was about normal, with 9 material articles in the past 90 days: 6 positive, none negative and 3 neutral. The most consequential disclosures concern project delivery rather than reported financial results.
Storex, in which Vidullanka is investing around LKR 2.0 billion for a 49% stake, holds 12 CEB-awarded 10 MW/40 MWh battery projects. The Ranna project, reported on 3 September as a completed LKR 1.8 billion, 10 MW solar plant held through a 50% joint venture, awaits grid connection before commercial generation can begin. Vidullanka also made a first LKR 100 million equity infusion into the Medawachchiya dendro project, reported on 16 September.
Financials
June-quarter revenue rose 7.5% year-on-year to LKR 1.1 billion, while net profit rose 84.5% to LKR 556 million. Profit therefore grew much faster than the revenue base, improving the earnings attached to each share, but the twelve months to June still recorded revenue 21.9% below the comparable prior period at LKR 3.9 billion.
Gross margin was broadly unchanged at 73.0%, from 73.1% a year earlier, and ranked third of seven comparable June quarters. Operating margin cannot be measured from the latest filing because the operating-profit line is unavailable. The revenue-only net margin is not a valid profitability measure because LKR 330 million of other operating income was material; on total income, net margin was 38.5%, but a comparable year-ago total-income margin is unavailable.
The June filing used 1.036 billion shares outstanding, versus 1.038 billion shares now. Equity attributable to owners was LKR 10.3 billion, and minority interests took only a small share of group profit, so the reported EPS remains broadly representative of profit available to the listed shares.
Risks
The principal risk is the enlarged debt load. Total debt reached LKR 7.0 billion at June, after LKR 4.9 billion at the March year-end, increasing the funding burden while several new projects require capital before they contribute operating cash flow.
At the March year-end, gearing, meaning debt against owners' equity, was 52.1%. The current ratio was 1.69 times, meaning the company had LKR 1.69 of short-term assets, including receivables and other current assets, for every LKR 1 of bills due within a year. That is adequate coverage, but weaker than the prior year's 2.1 times.
Profit before tax plus finance costs covered finance costs 6.56 times, down from 8.87 times a year earlier, so interest remained covered but the cushion narrowed. Operating cash flow was 0.86 times annual net profit and free cash flow was negative LKR 1.4 billion, indicating that accounting profit did not fully arrive as cash after investment spending.
Outlook
As at 17 September 2026, the next formal evidence is the September interim quarter, expected between 6 and 14 November 2026. It will show whether the June profit improvement has continued and whether the higher debt is translating into assets that can contribute earnings.
The nearer operating project milestone is grid energisation for the completed Ranna solar plant. Commercial generation would add output from the completed asset, while continued delay would defer that contribution. The data does not disclose the tariff or expected earnings contribution from Ranna, Storex or Medawachchiya, so it cannot quantify the return from the expansion.