HAYLEYS PLC Financial Summary
HAYL.N0000 · HAYLEYS PLC · Consumer Discretionary Distribution & Retail · 2026-08-12
Hayleys PLC Financial Summary and Investment Analysis
Executive Overview
Hayleys PLC is a highly diversified Sri Lankan conglomerate operating across 14 sectors and 203 companies, with businesses spanning Consumer & Retail, Transportation & Logistics, Purification, Hand Protection, Agriculture, Textiles, Energy, Mobility & Projects, Plantations, Construction Materials, Eco Solutions, Leisure, Tea Exports and related industries. The Group employs 38,746 people, generated approximately USD 800 mn of foreign currency earnings, contributed around 5% of Sri Lanka's exports, and paid Rs.55.36 bn in direct and indirect taxes during the year ended 2026-03-31.
The financial picture is mixed but strategically expansionary. Revenue reached a record Rs.585.02 bn in the year ended 2026-03-31, up 19%, but EBITDA grew only 8%, operating profit 2%, and continuing-operation PAT declined 1.7%, demonstrating significant margin compression. Conversely, the latest Q2 2026 results show materially stronger YoY earnings growth: revenue +38%, operating profit +53%, PBT +61%, and total PAT +86%.
The principal financial concern is cash conversion. Despite accounting profitability, audited operating cash flow for the year ended 2026-03-31 was negative Rs.17.12 bn, while heavy capital expenditure and working-capital expansion drove borrowing materially higher. Total debt rose 42% during the year, faster than both revenue and equity.
The year ended 2026-03-31 financial statements were audited by Ernst & Young with an unmodified opinion that they give a true and fair view under Sri Lanka Accounting Standards. The Q2 2026 statements are unaudited.
Periods covered: Q2 2025, Q3 2025, Q4 2025, Q1 2026, Q2 2026; annual periods ended 2024-03-31, 2025-03-31 and 2026-03-31.
Financial Performance
Revenue and Profitability Trends
Annual Group performance — Rs. mn
| Period ended | Revenue | EBITDA | Operating Profit | PBT | PAT - All Operations | Parent Profit | GP Margin | Net Margin* |
|---|---|---|---|---|---|---|---|---|
| 2024-03-31 | 435,251 | 54,224 | 43,901 | 27,388 | 14,847 | 6,889 | 24.88% | 3.41% |
| 2025-03-31 | 490,558 | 60,261 | 48,398 | 36,710 | 22,512 | 13,449 | 23.92% | 4.59% |
| 2026-03-31 | 585,021 | 64,817 | 49,367 | 38,038 | 22,223 | 14,052 | 23.28% | 3.80% |
*PAT from all operations / continuing-operation revenue.
Revenue growth accelerated strongly in the latest annual period, but profitability did not keep pace:
- Revenue: +19.3%
- EBITDA: +7.6%
- Operating profit: +2.0%
- PBT: +3.6%
- Continuing PAT: -1.7%
- Parent-attributable profit: +4.5%
Gross margin declined from 24.88% → 23.92% → 23.28%, while operating margin fell from 10.09% in 2024 to 8.44% in 2026. This indicates that rapid top-line expansion has recently required proportionately greater operating resources, financing and working capital.
Quarterly Trend
| Natural Quarter | Revenue Rs. mn | Gross Profit Rs. mn | PBT Rs. mn | Total PAT Rs. mn | GP Margin | PAT Margin |
|---|---|---|---|---|---|---|
| Q2 2025 | 130,363 | 29,912 | 6,300 | 3,177 | 22.95% | 2.44% |
| Q3 2025 | 138,888 | 32,645 | 7,495 | 4,386 | 23.50% | 3.16% |
| Q4 2025 | 151,878 | 36,012 | 9,399 | 6,455 | 23.71% | 4.25% |
| Q1 2026 | 164,621 | 37,929 | 13,868 | 8,204 | 23.04% | 4.98% |
| Q2 2026 | 179,325 | 39,924 | 10,146 | 5,923 | 22.26% | 3.30% |
Q2 2026 was exceptionally strong YoY: revenue +38%, gross profit +33%, operating profit +53%, PBT +61%, continuing PAT +73%, and total PAT +86%. Parent profit rose 137%.
However, compared with Q1 2026, revenue grew 8.9% while operating profit declined 12.1%, PBT declined 26.8% and PAT declined 27.8%. Finance costs and taxation were significant contributors, while GP margin fell to 22.26%.
Q2 2025 has been re-presented for the Maldives hotel operation classified as discontinued. Earlier interim-quarter presentation may therefore differ slightly from final annual classifications.
Sector Performance
| Sector — year ended 2026-03-31 | Revenue | Profitability | Main Observation |
|---|---|---|---|
| Consumer & Retail | Rs.156.74 bn, +44% | PBT Rs.11.46 bn, +76% | Largest earnings contributor |
| Transportation & Logistics | Rs.117.50 bn, +10% | PBT Rs.6.0 bn, -8% | Regional expansion; profit pressure in some clusters |
| Purification | Rs.66.77 bn, +56% | PBT Rs.5.89 bn, +7% | Strong demand but raw-material margin pressure |
| Hand Protection | Rs.51.10 bn, +10% | PBT Rs.4.36 bn, +13% | Better mix and efficiency |
| Agriculture | Rs.44.28 bn, +18% | PBT Rs.2.82 bn, +8% | Export and Bangladesh growth |
| Textiles | Rs.37.79 bn, -13% | PBT Rs.1.04 bn | Weak global orders |
| Plantations | Rs.19.97 bn, +4% | PBT Rs.2.21 bn, -24% | Wage and operating-cost pressure |
| Eco Solutions | Rs.15.11 bn, +18% | PBT Rs.98.93 mn vs loss Rs.523.92 mn | Clear turnaround |
Q2 2026 shows particularly strong momentum in Consumer & Retail, Transportation & Logistics, Purification, Hand Protection, Industry Inputs and Energy/Mobility/Projects. Textiles, Tea Exports and Leisure remain softer.
Balance Sheet Analysis
| Rs. mn | 2024-03-31 | 2025-03-31 | 2026-03-31 | 2026-06-30 |
|---|---|---|---|---|
| Total Assets | 442,044 | 510,693 | 645,824 | 686,985 |
| Total Debt | 171,883 | 204,410 | 289,657 | ~305,034 |
| Total Equity | — | ~144,092 | 170,501 | 177,190 |
| Parent Equity | 80,163 | 93,142 | 113,215 | 117,877 |
| Current Ratio | 1.14x | 1.16x | 1.19x | ~1.13x |
| Group Debt/Equity | 1.37x | 1.42x | 1.70x | ~1.72x |
Assets expanded 26% during the latest annual period and another 6.4% by 2026-06-30. Growth reflects capacity investment, new businesses and substantially higher working capital.
At 2026-06-30:
- Inventories reached Rs.127.02 bn, +9% from 2026-03-31.
- Trade and other receivables reached Rs.214.39 bn, +10%.
- Interest-bearing debt was approximately Rs.305.03 bn.
- Cash plus short-term deposits were approximately Rs.59.44 bn.
- Group equity grew to Rs.177.19 bn.
The balance sheet therefore continues expanding rapidly, but debt has grown faster than equity. Net assets per share declined from Rs.150.95 at 2026-03-31 to Rs.148.27 at 2026-06-30, largely reflecting the increase in issued shares following the rights issue.
Cash Flow Analysis
| Rs. mn | Year ended 2025-03-31 | Year ended 2026-03-31 | Q2 2025 | Q2 2026 |
|---|---|---|---|---|
| Operating Cash Flow | 17,990 | (17,125) | 1,989 | (441) |
| PPE Capital Expenditure | (20,774) | (30,661) | (4,105) | (17,917) |
| Simple Free Cash Flow | (2,784) | (47,786) | (2,116) | (18,358) |
Cash flow is the principal weak point in the current financial profile.
The year ended 2026-03-31 produced strong accounting earnings but negative Rs.17.12 bn operating cash flow, mainly because of working-capital absorption. Capital investment then pushed simple free cash flow to approximately negative Rs.47.79 bn.
Q2 2026 continued this pattern. Operating cash flow was negative Rs.441 mn and PPE investment surged to Rs.17.92 bn. Rights proceeds of approximately Rs.9.0 bn were received, but financing cash flow was still negative Rs.6.12 bn after interest and debt repayments.
Dividend sustainability is stronger from an earnings perspective: the Rs.6.00 per share dividend represented a 32.07% payout ratio and 3.12x earnings cover. Nevertheless, sustained negative Group free cash flow would make future distributions increasingly dependent on improved cash conversion, parent-company cash generation or external financing.
Key Financial Ratios and Growth Indicators
| Indicator | Latest Relevant Figure | Interpretation |
|---|---|---|
| 2-year Revenue CAGR | 15.9% | Strong structural top-line growth |
| 2-year Group PAT CAGR | 22.3% | Strong longer-term earnings growth |
| 2-year Debt CAGR | 29.8% | Debt growing materially faster than revenue |
| ROE | 12.41% | Down from 14.44% |
| ROA | 3.44% | Down from 4.41% |
| ROCE | 10.73% | Down from 13.89% |
| Annual interest cover | 2.88x | Adequate but lower than 3.33x |
| EPS — year ended 2026-03-31 | Rs.18.71 | +4.5% |
| Continuing EPS | Rs.20.34 | +3.3% |
| P/E at 2026-06-30 | 13.04x | Based on Rs.238 market price |
| NAV/share at 2026-06-30 | Rs.148.27 | Versus market price Rs.238 |
| Approx. inventory turnover | 4.25x / ~86 days | Conglomerate-level estimate |
Hayleys invested Rs.969 mn in R&D, up 19%, introduced 785 new products, up 66%, and had 680 products in development. Customers acquired increased 27% to 2.13 mn. These are meaningful non-financial growth indicators.
Economic and Market Context
Sri Lanka's economy grew 5.0% in 2025, with Industrial activity +7.8%, Services +3.3% and Agriculture +1.4%. Inflation remained relatively low, interest rates declined, unemployment fell to 3.9%, the current account recorded a USD 1.7 bn surplus, and official reserves reached approximately USD 7 bn by 2026-03-31.
This environment supported Consumer & Retail, construction-related activity, finance and domestic demand. The rupee nevertheless depreciated 6.3% against the US dollar, creating mixed effects across Hayleys' import-heavy and export-oriented businesses.
Global geopolitical tensions represent the main external uncertainty. Management specifically identifies energy costs, freight volatility, commodity prices, supply-chain disruption, tourism, export demand and household purchasing power as transmission channels.
Future Potential and Outlook
The Group is simultaneously expanding existing high-value businesses and entering new verticals.
Major growth platforms include:
- Large-format supermarkets: a new retail vertical leveraging Hayleys' sourcing, logistics, brands and distribution network; strategic locations and a leadership team have already been established.
- Mobility: OMODA and JAECOO electric/hybrid vehicles and broader sustainable-mobility opportunities.
- Renewable energy: a 50 MW wind project, 149 MW of solar projects under development, acquisitions adding 60 MW wind and 150 MW solar capacity, alongside an existing 54 MW renewable portfolio.
- Purification: USD 18.18 mn expansion in advanced energy-storage materials, targeting demand from EVs, AI-driven data centres and grid-storage applications.
- Manufacturing: specialised glove capacity, a larger Mabroc Tea facility and a coconut-water-concentrate facility.
- Digitalisation/AI: Group-wide roadmap covering analytics, intelligent automation, customer engagement and manufacturing quality.
- Logistics acquisitions: during Q2 2026, Hayleys Advantis obtained control of Lanka Shipping & Logistics, Oceanserve Lanka and Aiyer Lanka Shipping for Rs.433 mn consideration, strengthening maritime capabilities.
- Strategic equity investments: 40.63% exposure to Harischandra Mills PLC and 9.48% exposure to Diesel & Motor Engineering PLC were added during the year.
The Rs.9 bn rights issue, oversubscribed by approximately Rs.2 bn, increased issued shares from 750 mn to 795 mn and is intended to support investment while partially reducing existing borrowings.
Risks and Challenges
- Cash conversion: negative annual operating cash flow despite Rs.22.22 bn PAT is the clearest financial warning indicator.
- Leverage: debt reached approximately Rs.305 bn by 2026-06-30, while the balance sheet remains heavily reliant on short-term borrowing.
- Margin compression: annual revenue grew 19%, but operating profit only 2%; GP and operating margins have declined over multiple periods.
- Execution risk: supermarkets, mobility, renewable energy, capacity expansions and acquisitions require significant capital before their earnings potential is proven.
- Weak sectors: Textiles, Plantations, Tea Exports and parts of Leisure/renewable power remain exposed to demand, wage, tariff and input-cost pressures.
- Audit-focus areas: inventories were Rs.116.37 bn at 2026-03-31 with Rs.10.35 bn provision; Group expected-credit-loss allowances were Rs.8.69 bn, including Rs.4.67 bn in Consumer & Retail receivables.
- Tax/legal contingencies: Hayleys PLC and Singer entities are contesting several tax, VAT and customs assessments. Singer-related matters include a Rs.1.376 bn income-tax/interest/penalty assessment and other disputed VAT/customs exposures. No provisions were recognised where management assessed outflow as not probable.
- Geopolitics and FX: energy-price shocks, Middle East instability, freight disruption and rupee movements can affect different Hayleys sectors in opposing ways.
Shareholder and Corporate Information
At 2026-06-30, the share traded at Rs.238.00, with a quarter range of Rs.214.00–Rs.244.00 and market capitalisation of Rs.189.01 bn. By 2026-08-12, the latest included close was Rs.226.75.
Across the latest 90 trading sessions to 2026-08-12:
- Price return: +4.61%
- Range: Rs.210.00–Rs.244.00
- Average daily turnover: Rs.34.69 mn
- Median daily turnover: Rs.15.05 mn
- Foreign holdings: +373,000 shares, although ownership percentage declined from 2.81% to 2.70% following the enlarged share base.
At 2026-06-30, the largest shareholder was Mr. K.D.D. Perera with 51.01%, followed by the Trustees of the D.S. Jayasundera Trust with 10.94% and Hatton National Bank PLC/Phantom Investments (Private) Limited with 5.40%. The top 20 shareholders controlled 79.23%.
Public holding was 37.73%, represented by 17,322 shareholders, with a float-adjusted market capitalisation of approximately Rs.71.31 bn.
Governance comprises 13 Directors, with 54% Non-Executive and 31% Independent Non-Executive representation. The Chairman and Chief Executive roles are combined under Mohan Pandithage, with a Senior Independent Director providing additional governance balance. The Group reports full compliance with applicable CSE corporate-governance rules and no material regulatory fines or violations during the annual period.
Investment Decision Indicators
Strengths
- Strongly diversified earnings base across domestic and export industries.
- Record revenue and accelerating Q2 2026 YoY earnings.
- Consumer & Retail, Purification, Hand Protection and Logistics showing strong momentum.
- Significant exposure to structural themes including renewable energy, EVs, energy storage and modern retail.
- Strong market positions, export capability and innovation pipeline.
- Rights issue strengthened equity and demonstrated shareholder support.
Weaknesses
- Negative operating/free cash flow despite healthy accounting profit.
- Debt growth substantially exceeding revenue and equity growth.
- Multi-year deterioration in gross, operating, ROA and ROCE metrics.
- High inventories and receivables require substantial working capital.
- Several mature sectors currently face margin or demand pressure.
Opportunities
- Conversion of current heavy capital investment into future earnings and cash flow.
- Supermarket and mobility verticals becoming material contributors.
- Regional logistics expansion and new maritime acquisitions.
- Energy-storage materials and renewable projects.
- Recovery in Sri Lankan consumption, tourism and investment activity.
Threats
- Prolonged geopolitical or energy-price shock.
- Further working-capital expansion requiring additional borrowing.
- Execution risk across multiple large projects simultaneously.
- Raw-material, wage and financing-cost inflation.
- Tax and legal contingencies.
- Dilution of returns if new capital produces insufficient incremental earnings.
Overall Assessment
Hayleys PLC currently presents strong operating and strategic growth alongside a materially more demanding financial structure. Revenue diversification, improving domestic demand, new growth verticals and Q2 2026 earnings acceleration are important positives. The counterweight is that debt, capital expenditure and working capital have expanded much faster than cash generation.
The most important indicators to monitor in subsequent quarters are therefore operating cash flow, debt reduction or stabilisation, Q2 2026 margin sustainability, returns from the current capital-expenditure cycle, supermarket/mobility execution, and whether ROCE begins recovering. A meaningful improvement in cash conversion without sacrificing growth would materially strengthen the financial profile; continued debt-funded expansion with weak free cash flow would increase financial risk.