# FIRST CAPITAL HOLDINGS PLC Financial Summary Canonical URL: https://pal.lk/updates/cfvf-financial-summary Symbol: CFVF.N0000 Company: FIRST CAPITAL HOLDINGS PLC Sector: Financial Services Published: 2026-08-13T19:45:01Z Last updated: 2026-08-13T19:45:01Z # 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.