Hayleys is not on the edge of distress — Fitch AAA(lka), a 51% controlling owner who just re-subscribed Rs. 4.6bn into the rights issue, and falling rates provide a real safety net. But the quality of FY26's record revenue is poor, and the two capital raises (Rs. 5.88bn debenture + Rs. 9bn rights issue) were plugging a genuine cash hole, not funding opportunistic expansion.
The single number that confirms the thesis: operating cash flow collapsed from +Rs. 17.99bn in FY25 to −Rs. 10.50bn in FY26. Cash generated from operations went from Rs. 31.44bn to Rs. 1.92bn. The Rs. 9bn rights issue + Rs. 5.88bn debenture + ~Rs. 15bn net new borrowing were used to fund a Rs. 43bn pre-financing cash deficit. They then paid Rs. 8.9bn in dividends — partly to the 51% owner who re-subscribed Rs. 4.6bn of that back into the rights. Circular, and worth watching.
The whole FY27 thesis rests on one question: does the Rs. 79bn receivables/inventory build unwind (demand-backed, converts to cash) or does it persist (stale stock, slow collections, forces another raise)? Watch H1 FY27 operating cash flow above all else.
| Line Item | FY26 (Rs. bn) | FY25 (Rs. bn) | Change % | Commentary |
|---|---|---|---|---|
| Revenue | 585.02 | 490.56 | +19.3% | Half-trillion milestone; Q4 alone Rs. 164.6bn (+29%) |
| Cost of Sales | 442.27 | 369.06 | +19.8% | Growing slightly faster than revenue — margin pressure |
| Direct Interest (in COGS) | 6.57 | 4.18 | +57.3% | Embedded finance/leasing cost — fastest-growing cost item |
| Gross Profit | 136.18 | 117.32 | +16.1% | Gross margin: 23.3% vs 23.9% — mild but real slip |
| Distribution Expenses | 23.74 | 17.85 | +33.0% | Consumer & Retail expansion driving higher distribution |
| Admin Expenses | 65.62 | 55.07 | +19.2% | In line with revenue — no operating leverage visible |
| EBIT (Results from Ops) | 49.37 | 48.40 | +2.0% | EBIT margin: 8.4% vs 9.9% — 143bps compression on 19% revenue growth |
| Finance Income | 9.13 | 6.96 | +31.2% | Finance/leasing book earning well; partial offset |
| Finance Cost | (19.93) | (18.40) | +8.3% | Growing, but less than revenue growth — some relief |
| PBT (Continuing) | 38.04 | 36.71 | +3.6% | PBT margin: 6.5% vs 7.5% |
| Tax Expense | (14.59) | (12.86) | +13.4% | Effective tax rate: 38.4% vs 35.0% — rising tax drag |
| PAT (Continuing) | 23.45 | 23.85 | −1.7% | Continuing ops PAT declined despite +19% revenue |
| Discontinued Ops Loss | (1.23) | (1.34) | — | Maldives resort — now being sold for USD 17.25m |
| Total PAT (Group) | 22.22 | 22.51 | −1.3% | Near-flat on 19% revenue growth |
| PAT to Parent Owners | 14.05 | 13.45 | +4.5% | Parent margin: 2.4% vs 2.7%. EPS: Rs. 18.71 vs Rs. 17.91 |
| PAT to Non-Controlling Int. | 8.17 | 9.06 | −9.8% | Subsidiaries less profitable than the group average |
| Balance Sheet Item | FY26 (Rs. bn) | FY25 (Rs. bn) | Change | % Change |
|---|---|---|---|---|
| Trade Receivables (Current) | 195.7 | 139.4 | +56.3bn | +40.3% |
| Non-Current Trade Receivables | 30.4 | 19.3 | +11.2bn | +57.8% |
| Inventories | 116.4 | 91.9 | +24.5bn | +26.6% |
| Trade Payables | 85.7 | 84.4 | +1.3bn | +1.5% |
| Net WC (Recv+Inv−Payables) | 226.4 | 147.0 | +79.4bn | +54.0% |
| WC Intensity (% revenue) | 38.7% | 30.0% | +8.7pp | Surging |
| DEBT STRUCTURE | ||||
| LT Interest-Bearing Borrowings | 92.9 | 71.7 | +21.3bn | +29.7% |
| Current Portion of LT Debt | 43.9 | 30.9 | +13.0bn | +41.8% |
| Short-Term Borrowings | 152.9 | 101.8 | +51.0bn | +50.1% |
| Total Debt (Gross) | 289.7 | 204.4 | +85.3bn | +41.7% |
| Cash & Short-Term Deposits | 54.0 | 51.7 | +2.3bn | +4.4% |
| Net Debt | 235.7 | 152.7 | +83.0bn | +54.3% |
| Total Equity | 170.5 | 144.1 | +26.4bn | +18.3% |
| Net Debt / Total Equity | 1.38x | 1.06x | Climbing | — |
| EQUITY & CAPITAL STRUCTURE | ||||
| Parent Equity | 113.2 | 93.1 | +20.1bn | +21.6% |
| — incl. Rights Issue Pending Allotment | 9.0 | — | New | — |
| Non-Controlling Interests | 57.3 | 51.0 | +6.3bn | +12.4% |
| Shares Outstanding (post-rights) | ~751mn | ~706mn | +45mn | +6.4% |
| Net Assets / Share (parent) | Rs. 150.75 | Rs. 131.93 | +14.3% | — |
Hayleys raised Rs. 5.88bn (debentures) + Rs. 9bn (rights) = Rs. 14.88bn in new capital, took on ~Rs. 85bn of net new debt, and ran a Rs. 43bn pre-financing cash deficit — then paid Rs. 8.9bn in dividends to parent shareholders out of borrowed/raised money. A chunk of those dividends flowed to the 51% owner (Dhammika Perera's entities: ~Rs. 4.5bn) who then re-subscribed Rs. 4.6bn into the rights issue. The net economic effect: the controlling shareholder received dividends and re-injected approximately the same amount as "fresh" equity capital. Legally and technically fine, but worth understanding if you're modelling capital allocation quality.
Based on FY26 Unaudited Interim Filing · Revenue Rs. 585bn · EBIT Rs. 49.4bn · D&A Rs. 15.5bn · Shares ~751mn
| Metric | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|
• Hayleys PLC — FY26 Unaudited Interim Report (12 months to 31 March 2026, signed 29 May 2026)
• Hayleys PLC — Q3 FY26 Interim Report (9 months to 31 December 2025)
• Daily FT — Hayleys tops half-trillion revenue milestone
All Rs. figures converted from Rs. '000 as stated in the CSE filings. FY26 is unaudited; audited annual report may restate. Market price Rs. 234.50 used as at research date. DCF model is illustrative — small input changes produce large output swings due to high leverage and high LKR discount rates. This is not investment advice.