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KARO: Index Inclusion Will Support Stronger Medium Term Earnings Outlook

Connected IoT And Fleet Digitization Will Expand Telematics Ecosystems

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KARO
AnalystHighTarget
Not Invested
Published 17 Jun 2025

Update shared on 12 Dec 2025

Fair value Increased 7.40%
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AnalystHighTarget's Fair Value
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1Y
-1.6%
7D
-1.2%

Analysts have modestly raised their price target on Karooooo by about 7 percent to approximately $63, citing a slightly higher long term valuation multiple. This more than offsets marginally lower assumptions for revenue growth and profit margins.

What's in the News

  • Reaffirmed 2026 guidance for Cartrack subscription revenue at ZAR 4.7 billion to ZAR 4.9 billion, implying 16% to 21% growth, with operating profit margin expected between 26% and 31% (company guidance).
  • Maintained 2026 adjusted earnings per share outlook in the range of ZAR 32.50 to ZAR 35.50, supporting confidence in medium term profitability (company guidance).
  • Added to the S&P Global BMI Index, increasing the potential for passive and index linked investment inflows (index announcement).

Valuation Changes

  • The fair value estimate has risen slightly to approximately $63 from about $59, reflecting a modestly higher long-term intrinsic valuation.
  • The discount rate has increased marginally from about 7.9 percent to roughly 8.1 percent, implying a slightly higher required return for future cash flows.
  • Revenue growth assumptions have eased slightly from around 20.1 percent to about 19.3 percent, indicating a modestly more conservative top-line outlook.
  • Net profit margin assumptions have fallen modestly from roughly 18.3 percent to about 17.2 percent, reflecting slightly lower expected profitability.
  • The future P/E multiple has risen slightly from approximately 27.5x to about 27.6x, supporting a somewhat richer valuation on forward earnings.

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Disclaimer

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