Partnerships Enhance Atturra’s Digital Prowess

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New research on IT services group Atturra points to shares trading at a discount to valuation despite sustained organic growth supported by strategic partnerships and acquisitions.

-IT services group Atturra undervalued, Ord Minnett concludes
-Sustained organic growth, ongoing M&A activity
-Margins managed despite FY25 revenue shortfall
-Future organic growth supported by strategic partnerships

By Mark Woodruff

Ord Minnett has initiated coverage on IT services group Atturra ((ATA)) arguing the stock trades at an unjustified discount to both the broader market and sector peers, particularly as the proportion of highly valued recurring revenue continues to grow.

Broker Moelis previously highlighted the company’s distinct strategy, targeting 20% annual top-line growth through a balanced mix of organic expansion and acquisitions.

Shaw and Partners supports the positive undertone expressed by its two peers, basing its own investment thesis on Atturra’s ability to harness specialist capabilities to deliver sustained organic growth while actively consolidating a fragmented sector.

The Sydney-based group listed on the ASX in December 2021 at 50c and last traded at 85c. By late 2024, Atturra had shares more than doubled from the IPO level, reaching a 52-week high of around $1.28. Since then, the stock pulled back, and over the past year has traded as low as around 70c at one point.

Highlighting the company’s significant presence in the Australian IT services market, at the time of its IPO, Atturra had over 600 clients and around 500 staff.

Now the federal election is over and interest rate cuts are expected, the analyst at Ord Minnett anticipates a recovery in revenue growth from both government and private-sector clients in the years ahead.

Providing cloud services, data & integration, as well as managed services and business applications, Atturra has grown rapidly (via multiple acquisitions) and now serves diverse sectors such as local & federal government, utilities, education, defence, financial services, and manufacturing.

The company has formed strategic partnerships with leading global technology providers including Microsoft, Software AG, Boomi, OpenText, Nuix ((NXL)), HPE, QAD, Cisco, PureSystems, HP, and Smartsheet.

Moelis explains these alliances enhance Atturra’s ability to deliver digital transformation by broadening its offerings in data integration, advanced analytics, automation, artificial intelligence, and machine learning.

According to this broker, future organic growth will be supported by expanding these partnerships, strengthening capabilities in high-demand technologies, targeting priority industry verticals, and deploying specialised, niche solutions.

Recent acquisitions include North American Boomi partner Kitepipe in March 2025 and specialist SAP consultancy DalRae in June.

Kitepipe helps businesses streamline operations and enhance data connectivity, explains Morgans, while DalRae was the inaugural recipient of the SAP Business AI Award and is a multi-time SAP Industry Disrupter Award winner.

Morgans believes Atturra operates in attractive market niches which exhibit strong growth characteristics typical of high-performing IT services businesses.

This broker also highlights Atturra’s increasingly defensive profile, supported by a growing share of recurring managed services revenue and a high-quality customer base.

Atturra operates with two core strategic pillars: a technology and an industry focus.

The technology strategy involves focusing on high growth technologies or technologies where Atturra can have a market dominant position, while the industry strategy targets industries in which there is either a high barrier to entry or no clear market leader.

Driven by both levers, Ord Minnett highlights strong earnings growth prospects, forecasting a 7% compound annual growth rate (CAGR) in organic earnings over the next two fiscal years. CAGR could rise to 13%, suggest the analyst, should management meet its ambitious 10% annual revenue growth target.

July 15 trading update and FY26 prospects

As part of last week’s trading update, management revealed unaudited FY25 revenue will exceed $300m, up more than 20% on FY24, though marginally lower than the guidance range of $305m-320m.

For FY26 overall revenue and earnings growth is forecast to exceed 20%, based on the combination of organic growth and acquisitions already completed in FY25, with a return to historic organic growth rates of around 10%.

In addition to the forecast 20% growth, Atturra remains well positioned to undertake additional acquisitions, with over $89m in cash and $35m in undrawn debt facilities at the end of FY25.

Encouragingly, Ord Minnett points out management’s long-term incentives are tied to ambitious targets.

These targets include an EPS CAGR of 9-17% from FY24 to FY27 and a share price range of $1.03 to $1.30 by August 2027. 

Both targets represent significant upside relative to Ord Minnett’s current estimates.

Margins

Atturra’s recent trading update for FY25 showed operating earnings in line with Ord Minnett and market expectations despite revenue falling short. This outcome highlights the company’s ability to manage its margins, suggests the broker.

Revenue was impacted by lower-than-normal organic growth, noted management, and an around -$15m year-on-year reduction in revenue in Federal Government and Defence-related businesses. 

Post interim results in February, Shaw and Partners observed the earnings (EBITDA) margin had dipped below 10% to 9.6% for the first half.

Just prior to the interim results, management highlighted several temporary factors affecting margins, including the extension of a major project timeline from the originally planned 6 months to 18 months, as well as bid costs associated with a multi-year recurring project.

Given Atturra’s revenue was gaining scale, and Managed Services were growing as a proportion of the business (with higher-than-average margins), Shaw was eager to see signs of operating leverage.

This will be a key point to watch when management presents FY25 full year results on August 27.

Proprietary offerings offer potential material upside

Management has been steadily rolling out three product-style’ offerings, which Shaw believes could become key value drivers, or potential crown jewels, if successfully scaled.

These include: Scholarion, a Student Information System for K12 education; the Atturra Cloud Platform, an end-to-end cloud solution compatible with products such as Nuix’s Neo; and a tailored version of the Atturra Cloud Platform specifically designed for Boomi.

In the broker’s view, these products could support recurring revenue, justify a higher valuation multiple, and act as a potential catalyst for re-rating.

Ratings and targets

Ord Minnett joins Shaw and Partners among daily covered brokers in the FNArena database with a Buy rating on Atturra, while Morgans has an Accumulate stance (one notch below Buy).

The average target price of the three is $1.05, suggesting around 24% upside to the 85c closing share price on July 21.

Outside of daily coverage, Moelis has a Buy rating and $1.07 target.

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