FIRST CAPITAL HOLDINGS PLC Financial Summary
CFVF.N0000 · FIRST CAPITAL HOLDINGS PLC · Financial Services · 2026-08-13
First Capital Holdings PLC Financial Summary and Investment Analysis
Executive Overview
First Capital Holdings PLC is a diversified financial-services group operating across government securities/primary dealing, corporate finance advisory and dealing, asset/wealth management, and stockbroking. The reports cover Q3 2023 to Q2 2026, with the latest audited annual period ending 2026-03-31 and the latest unaudited quarter ending 2026-06-30.
Performance has been highly market-cycle-sensitive. Exceptional gains followed falling interest rates in 2023 and a strong fair-value uplift in Q4 2024, while Q4 2025–Q2 2026 produced three consecutive quarterly losses as fair-value losses, geopolitical volatility, the May 2026 policy-rate increase and tax-related costs outweighed trading income. For the year ended 2026-03-31, income increased 7.3% to LKR 15,095.8m, but profit after tax fell 58.0% to LKR 2,105.2m, mainly because the preceding year's LKR 2,795.6m fair-value gain reversed to a LKR 1,088.8m loss, while operating expenses increased.
The balance sheet contracted materially by 2026-03-31, then re-expanded by 2026-06-30. Equity continued to fall, leverage rose, and interest cover weakened. At the same time, stockbroking, advisory activity, digital adoption and funding diversification provide potential counterweights to primary-dealer cyclicality.
Financial Performance
Revenue and Profitability Trends
For this financial-services business, conventional gross profit/gross margin is not reported meaningfully. The closest operating measure is net trading income before operating expenses, which incorporates fair-value movements.
| Period | Income (LKR m) | Fair-value Gain/(Loss) (LKR m) | Pre-operating Income (LKR m) | PAT (LKR m) | PAT Margin | EPS (LKR) |
|---|---|---|---|---|---|---|
| Q3 2023 | 11,773.4 | 1,906.4 | 11,630.2 | 6,784.4 | 57.6% | 15.05 |
| Q4 2023 | 5,773.4 | (1,661.9) | 1,288.5 | (236.8) | -4.1% | -0.81 |
| Q1 2024 | 5,833.2 | (1,191.5) | 2,305.4 | 800.5 | 13.7% | 1.69 |
| Q2 2024 | 3,760.3 | (789.6) | 1,135.6 | 581.9 | 15.5% | 1.31 |
| Q3 2024 | 2,536.2 | 130.8 | 761.0 | 315.5 | 12.4% | 0.75 |
| Q4 2024 | 4,428.1 | 3,529.2 | 5,792.0 | 3,628.3 | 81.9% | 8.46 |
| Q1 2025 | 3,344.2 | (74.8) | 1,588.0 | 491.0 | 14.7% | 1.06 |
| Q2 2025 | 4,132.0 | 1,279.7 | 3,429.2 | 2,149.0 | 52.0% | 4.90 |
| Q3 2025 | 3,884.9 | 303.0 | 2,120.3 | 1,282.7 | 33.0% | 3.16 |
| Q4 2025 | 3,922.9 | (1,178.4) | 777.6 | (165.8) | -4.2% | -0.43 |
| Q1 2026 | 3,155.9 | (1,493.1) | 262.3 | (1,160.7) | -36.8% | -2.86 |
| Q2 2026 | 2,128.4 | (1,085.6) | (565.0) | (726.1) | -34.1% | -1.60 |
- Q3 2023 was exceptional, driven by sharp interest-rate declines after domestic debt optimization and major government-securities gains.
- Q4 2024 was another unusually strong quarter, supported by LKR 3,529.2m of fair-value gains.
- Q2–Q3 2025 recovered as lower rates created trading opportunities, but the cycle subsequently reversed.
- Q2 2026 income fell 48.5% YoY and 32.6% QoQ. PAT swung from LKR 2,149.0m profit in Q2 2025 to a LKR 726.1m loss, although the loss narrowed 37.4% QoQ from Q1 2026.
- Income CAGR from Q2 2024 to Q2 2026 was approximately -24.8% p.a. Profit CAGR is not meaningful because earnings changed sign.
- For the year ended 2026-03-31, direct income reached LKR 15,065.0m. Gains on sale of financial assets, brokering income and dividends increased, while interest income declined.
Segment Performance — Year Ended 2026-03-31
| Segment | PAT (LKR m) | Prior Period PAT (LKR m) | Change |
|---|---|---|---|
| Primary Dealer | 1,606.4 | 3,042.4 | -47.2% |
| Corporate Finance | 930.4 | 2,227.9 | -58.2% |
| Asset Management | 83.5 | 106.1 | -21.3% |
| Stockbroking | 242.5 | 70.3 | +245.1% |
Stockbroking was the clearest earnings growth area. Corporate advisory deal volumes reportedly increased nearly fivefold, although combined corporate-finance profit fell as market-related gains normalized.
Balance Sheet Analysis
| Date | Assets (LKR bn) | Liabilities (LKR bn) | Equity (LKR bn) | NAV/Share (LKR) |
|---|---|---|---|---|
| 2024-03-31 | 78.67 | 70.73 | 7.94 | 17.58 |
| 2025-03-31 | 99.34 | 89.57 | 9.77 | 21.71 |
| 2025-09-30 | 119.66 | 106.48 | 13.17 | 29.71 |
| 2026-03-31 | 74.22 | 65.54 | 8.68 | 19.40 |
| 2026-06-30 | 83.99 | 76.04 | 7.95 | 17.80 |
At 2026-06-30, assets increased 13.2% QoQ, driven by financial assets at fair value through profit or loss and amortised-cost investments. Repos rose 19.7% and short-term borrowings 41.4%, while equity fell 8.4%.
Debt/equity increased from 7.07x to 9.19x, quick ratio fell from 1.32x to 1.18x, and interest cover dropped from 1.49x to 0.37x. The balance-sheet expansion therefore came with materially higher financial leverage.
Cash Flow Analysis
| Period | Operating CF | Investing CF | Financing CF | Net Cash Change |
|---|---|---|---|---|
| Year ended 2026-03-31 | (2,496.3)m | 459.9m | 897.0m | (1,139.5)m |
| Q2 2026 | 31.3m | (89.6)m | (200.0)m | (258.3)m |
Annual operating cash flow reversed from LKR 8,949.4m positive in the preceding year to LKR 2,496.3m negative. Dividends paid were LKR 2,835.0m, with additional dividend-related outflows to non-controlling interests and taxes. Gross debenture proceeds of LKR 6,000m helped refinance funding.
Mechanical free cash flow was negative, although standard industrial free-cash-flow interpretation is less useful because securities inventories and repos are core operating assets/liabilities.
Key Financial Ratios and Growth Indicators
| Indicator | Year ended 2026-03-31 | Prior Year |
|---|---|---|
| Operating Margin | 23.50% | 47.52% |
| Net Profit Margin | 13.95% | 35.66% |
| ROA | 2.43% | 5.64% |
| ROE | 23.22% | 58.97% |
| ROCE | 13.17% | 17.28% |
| Cost-to-Income | 39.56% | 40.79% |
| Debt/Equity | 7.07x | 8.66x |
| Interest Cover | 1.49x | 1.90x |
| Capital Adequacy Ratio | 24.22% | 15.55% |
| EPS | 4.77 | 11.58 |
| DPS | 7.00 | 7.50 |
| Dividend Payout | 146.65% | 64.74% |
| NAV/Share | 19.40 | 21.71 |
Trailing four-quarter EPS through Q2 2026 was approximately -LKR 1.73, so trailing P/E is not meaningful. At the Q2 2026 closing price of LKR 52.80 and NAV of LKR 17.80, P/B was approximately 2.97x.
The annual dividend payout above 100% means dividends exceeded annual earnings. Maintaining comparable distributions would therefore require stronger future earnings or additional balance-sheet support.
Economic and Market Context
Reported earnings are highly exposed to Sri Lankan interest-rate and capital-market conditions. Falling yields powered 2023 profits; 2024 represented normalization, followed by improved trading conditions during parts of 2025.
Cyclone Ditwah disrupted activity late in 2025, while Middle East tensions from early 2026 increased volatility and energy/macro uncertainty. In May 2026, the Central Bank raised the policy rate by 100 bps, restraining fixed-income and equity trading opportunities and creating adverse mark-to-market effects during Q2 2026.
Future Potential and Outlook
Management's priorities for the next 12–18 months are to diversify income away from cyclical market movements, deepen subsidiary and non-traditional revenue streams, expand selectively in regional markets, strengthen digital distribution, and develop sustainability/climate-linked finance.
Supporting indicators include strong stockbroking profit growth, rising advisory deal activity, digital onboarding increasing to 9,997, and digital adoption reaching 88.8% during the year ended 2026-03-31.
Offsetting these positives, active clients fell to 10,428 from 14,900, while divisional wealth-management AUM declined from LKR 96.2bn at 2026-03-31 to LKR 93bn at 2026-06-30.
Risks and Challenges
- Market/fair-value risk: Financial assets at fair value through profit or loss were LKR 58.84bn, approximately 79% of total assets at 2026-03-31. Earnings can therefore swing sharply with yields and equity prices.
- Funding/leverage risk: Debt/equity increased to 9.19x by 2026-06-30 and interest cover fell below 1x.
- Forward-position exposure: Government-securities forward purchases increased from LKR 747m at 2026-03-31 to LKR 5,866m at 2026-06-30; forward sales increased from LKR 1,619m to LKR 5,547m.
- Tax/regulatory exposure: Approximately LKR 296m was provided for a voluntary settlement of earlier VAT on financial services assessments and LKR 751m for subsequent periods, totaling approximately LKR 1,047m. Other tax appeals remain outstanding.
- Contingent exposure: Parent guarantees include LKR 2.05bn for subsidiary banking facilities and LKR 2.0bn relating to the parent shareholder.
- Dividend sustainability: High payout relative to current earnings could pressure capital if losses persist.
- Ownership concentration: Janashakthi-related holdings represented approximately 83.01% at 2026-06-30.
Shareholder and Corporate Information
At 2026-06-30, public holding was 16.98% across 11,573 public shareholders, with float-adjusted market capitalization of approximately LKR 3.63bn. Directors and the chief executive officer listed in the report held no shares.
The share closed Q2 2026 at LKR 52.80, with a quarter high of LKR 63.00 and low of LKR 49.80. The year ended 2026-03-31 reported a LKR 7.00 dividend per share versus LKR 7.50 previously. The group retained an A+ stable credit rating, while capital adequacy improved substantially.
Investment Decision Indicators
Strengths
- Diversified presence across primary dealing, advisory/dealing, wealth management and stockbroking.
- Strong stockbroking earnings growth and increasing advisory activity.
- Improved capital adequacy, high digital adoption and access to longer-term funding.
- Q2 2026 loss narrowed materially versus Q1 2026.
Weaknesses
- Three consecutive quarterly losses through Q2 2026.
- High dependence on interest-rate and fair-value movements.
- Falling equity/NAV, rising leverage and weak interest coverage.
- Annual operating cash flow turned negative and dividend payout exceeded earnings.
Opportunities
- Revenue diversification, regional expansion and digital distribution.
- Stronger advisory and brokerage contributions could reduce primary-dealer cyclicality.
- A favorable future interest-rate environment could materially improve securities valuations and trading conditions.
Threats
- Further rate increases or geopolitical shocks could generate additional mark-to-market losses.
- High leverage magnifies balance-sheet sensitivity.
- Tax, regulatory and contingent exposures could create additional earnings or cash pressure.
Overall assessment: The reports show a financially capable but highly cyclical group whose current earnings quality is weakened by repeated fair-value losses, increased leverage and reduced interest coverage. The central issue is whether diversification into brokerage, advisory, wealth management and digital channels can build more recurring earnings before market-driven profitability improves. The most important indicators to monitor are fair-value gains/losses, primary-dealer profitability, debt/equity, interest cover, NAV/share, wealth-management AUM, recurring fee income and dividend coverage, rather than relying on a single-period EPS or P/E measure.