KELANI CABLES PLC (KCAB.N0000) CSE Quick Score Fundamental Analysis

KELANI CABLES PLC (KCAB.N0000)

CSE Quick Score Fundamental Analysis – September 2026

Company: Kelani Cables PLC
CSE Symbol: KCAB.N0000
ISIN: LK0102N00000
Sector: Capital Goods / Manufacturing
Screening method: 10-point Fundamental Quick Score

Important: This is a fundamental screening exercise, not a buy or sell recommendation.

At a Glance

Kelani Cables PLC continues to show a strong balance sheet, positive annual profitability, low financial leverage and a reasonable valuation.

However, the latest June 2026 quarter introduces an important caution: although revenue increased, gross profit and operating profit declined, while operating cash flow turned negative because of substantially higher inventories, receivables and other working-capital requirements.

That makes KCAB an interesting stock to monitor — but the next few quarters will be important in determining whether earnings growth is sustainable.

THE 10-POINT QUICK SCORE

Fundamental Factor	Score	Assessment
Reasonable P/E	2/2	P/E around 9x
EPS Growth	1/2	FY2026 EPS increased, but latest quarter softened
ROE	1/1	Around 15%–16%
Low/manageable debt	1/1	Debt remains low relative to equity
Reasonable P/B	1/1	Around 1.3–1.4x
Positive cash flow	0/1	FY2026 positive, latest quarter negative
Dividend record	1/1	Consistent recent dividend payments
Competitive position	1/1	Established Sri Lankan cable manufacturer
TOTAL	8/10	Strong screening result

Quick Score: 8/10

Under the screening rules supplied, 8/10 falls into the "worth serious investigation" range.

That does not mean the share should automatically be bought. It means the company's fundamentals justify taking a closer look.

P/E – 2/2

At a share price around Rs.98–103, and trailing EPS of approximately Rs.11.25–11.30, KCAB is trading at roughly 8.7–9.1 times earnings.

This compares with a manufacturing-sector median P/E of approximately 12.1x in one current sector comparison.

What this tells us

KCAB is not trading at obviously high earnings multiple.

A P/E below 10x can attract the attention of value-oriented investors, particularly when accompanied by:

• positive earnings
• reasonable ROE
• manageable debt
• substantial net assets
• a continuing dividend

Score: 2/2

EPS Growth – 1/2

For FY2026, Kelani Cables reported:

• Revenue: Rs.20.62 billion
• FY2025 revenue: Rs.17.66 billion
• Profit: approximately Rs.2.46 billion
• FY2025 profit: approximately Rs.30 billion?

More importantly, the company's reported EPS increased from approximately Rs.10.56 to Rs.11.30, representing roughly 7% year-on-year growth.

However, the latest quarter ended June 2026 was less impressive.

June-quarter EPS was Rs.2.97, compared with Rs.3.02 in the corresponding quarter of 2025. Revenue increased from approximately Rs.4.55 billion to Rs.4.94 billion, but gross profit fell from Rs.1.08 billion to Rs.831 million and operating profit fell from Rs.757 million to Rs.463 million. (CSE)

Interpretation

The longer-term earnings trend is positive, but the latest quarterly margin compression deserves monitoring.

Score: 1/2

ROE – 1/1

Current data puts KCAB's ROE at approximately 15%–16%.

This is significant because the company is generating a respectable return on shareholders' capital while carrying relatively little interest-bearing debt.

The March 2026 balance sheet showed shareholders' equity of approximately Rs.15.38 billion, compared with total liabilities of approximately Rs.3.74 billion.

Score: 1/1

Debt – 1/1

This is one of the more interesting aspects of KCAB.

At 30 June 2026, interest-bearing borrowings consisted of approximately:

• Non-current borrowings: Rs.11.5 million
• Current borrowings: Rs.685.6 million
• Bank overdraft: approximately Rs.78.4 million

Against shareholders' equity of approximately Rs.15.96 billion. (CSE)

The company also had approximately:

• Rs.3.56 billion in fixed deposits
• Rs.3.24 billion in financial assets measured at FVTPL
• Rs.383 million in cash and cash equivalents.

Therefore, financial leverage does not currently appear excessive.

One point to watch, however, is that current borrowings increased from approximately Rs.236 million at March 2026 to Rs.686 million at June 2026.

Score: 1/1

P/B – 1/1

At 30 June 2026, KCAB reported net asset value of approximately Rs.73.21 per share.

At a market price around Rs.98–103, this represents approximately:

P/B = 1.34–1.41x

Current market data similarly places KCAB's P/B around 1.34x.

This is not a deep-discount valuation, but neither does it appear excessive for a profitable manufacturing company generating a mid-teens ROE.

Score: 1/1

Positive Cash Flow – 0/1

This is where the analysis becomes more interesting.

For FY2026, KCAB generated approximately Rs.1.34 billion in operating cash flow, compared with approximately Rs.525 million in the previous year.

That is positive.

But during the three months ended June 2026, the company reported negative operating cash flow of approximately Rs.159 million.

The major working-capital movements included:

• Inventory increase: approximately Rs.1.11 billion
• Receivables increase: approximately Rs.297 million
• VAT/recoverable balances and prepayments increased
• Trade payables decreased by approximately Rs.951 million. (CSE)

This explains why accounting profit did not translate into positive operating cash flow during the quarter.

This is an important WATCH item.

If inventories and receivables normalise and operating cash flow recovers, the concern becomes less significant.

If negative operating cash flow continues for several quarters, the fundamental picture would need to be reassessed.

Score: 0/1

Dividend Record – 1/1

KCAB has maintained a recent dividend-paying record.

The company declared a Rs.1.60 per-share first interim dividend for FY2025/26, with the ex-dividend date of 14 August 2026 and payment on 4 September 2026.

Recent dividends have included:

Financial Year	Dividend
2025/26	Rs.1.60
2024/25	Rs.1.50
2023/24	Rs.1.00
2022/23	Rs.0.65
2021/22	Rs.0.65
2020/21	Rs.0.45

The apparent large drop from Rs.15 to Rs.1.50 is related to the company's share subdivision, rather than simply a collapse in the underlying dividend. The company adjusted its EPS and net-asset-per-share calculations for the share split.

Score: 1/1

Competitive Position – 1/1

Kelani Cables has a long operating history in Sri Lanka, having originated in 1969 and subsequently becoming Kelani Cables PLC.

Its business includes manufacturing and distribution of a wide range of electrical and telecommunications cables and related electrical products.

The company's position in the local cable and electrical-products market, established manufacturing base, and association with the broader ACL/Kelani cable group provide relevant competitive considerations.

However, investors should still monitor:

• raw-material prices
• copper prices
• imported cable competition
• construction activity
• infrastructure spending
• electricity-sector investment
• export opportunities
• foreign-exchange movements

Score: 1/1

THE FIVE-NUMBER TEST

Your simplified test is:

P/E + EPS Growth + ROE + Debt + P/B

For KCAB:

Metric	Current Reading	Initial Interpretation
P/E	~9x	Reasonable
EPS growth	~7% FY2026	Positive but moderate
ROE	~15–16%	Healthy
Debt	Low relative to equity	Positive
P/B	~1.3–1.4x	Reasonable

The combination is interesting because the company does not require a very high valuation multiple to justify its current earnings.

But the critical question is whether earnings and margins can continue improving.

IS THE BUSINESS IMPROVING WHILE THE SHARE PRICE REMAINS RELATIVELY CHEAP?

This is the key question.

There are positive signs:

✅ FY2026 revenue increased approximately 16.8% year-on-year.

✅ FY2026 profit increased approximately 7%.

✅ EPS increased from approximately Rs.10.56 to Rs.11.30.

✅ ROE remains around the mid-teens.

✅ Net assets per share increased to approximately Rs.73.21 by June 2026.

✅ Debt remains relatively modest compared with shareholders' equity.

✅ The company continues to pay dividends.

But there are also warning signs:

⚠️ June 2026 operating profit declined sharply year-on-year.

⚠️ Gross margin came under pressure.

⚠️ Operating cash flow was negative for the June quarter.

⚠️ Inventory increased substantially.

⚠️ Current interest-bearing borrowings increased from March to June 2026.

Therefore, the most useful conclusion from this screening exercise is:

KCAB deserves further fundamental investigation, particularly into margins, working capital and cash-flow conversion.

The 8/10 Quick Score identifies KCAB as a company that passes the initial screening hurdle under this particular formula. It does not by itself establish intrinsic value or future share-price performance.

WHAT I WOULD TRACK NEXT

For the next KCAB financial statement, I would concentrate on five numbers:

1. Gross profit margin

Is the recent margin compression temporary or becoming structural?

2. Operating cash flow

Does cash generation recover from the June 2026 negative figure?

3. Inventory

Does the unusually large inventory increase reverse or continue?

4. EPS

Can EPS continue growing beyond the current approximately Rs.11–11.30 level?

5. Debt

Does the increase in short-term borrowing prove temporary, or does leverage continue rising?

These five indicators could tell us considerably more than the share price alone.

KCAB QUICK SCORE: 8/10

Screening classification:

8–10 = Worth serious investigation

Fundamental picture

Valuation: Reasonable
Profitability: Healthy
ROE: Positive
Debt: Manageable
Net assets: Strong
Dividend: Continuing
Cash flow: Needs monitoring
Recent margins: Needs monitoring
Competitive position: Established

Bottom line

Kelani Cables PLC (KCAB.N0000) currently presents an interesting fundamental screening profile: a P/E around 9x, P/B around 1.3–1.4x, mid-teens ROE, substantial net assets and relatively low financial leverage.

The biggest question is no longer simply whether the company is profitable. It is whether profit growth can be converted into sustainable operating cash flow while maintaining margins.

That is the area I would investigate before making any investment decision.

INVESTOR'S CHECKLIST

Before considering KCAB as a long-term investment, examine:

☐ Latest quarterly results
☐ Gross-profit margin trend
☐ EPS trend
☐ Operating cash flow
☐ Inventory turnover
☐ Receivables
☐ Debt movement
☐ Copper/raw-material prices
☐ Dividend sustainability
☐ CSE liquidity and trading volume
☐ Valuation relative to comparable CSE manufacturing companies
☐ Management commentary and future business outlook

Disclaimer

This article is an educational fundamental-analysis exercise based on publicly available information. The 10-point score is a personal screening framework and is not an official CSE rating, analyst recommendation or valuation model.

It should not be interpreted as a buy, sell or hold recommendation. Investors should conduct their own research, consider their risk tolerance and consult a qualified investment adviser where appropriate.

Data reference: Kelani Cables PLC interim financial statements, CSE disclosures and publicly available market data, with information available through September 2026.

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