Altron: The Unsung Hero of South African Tech?

When it comes to investing in tech, most local investors look offshore, Apple, Nvidia, Microsoft. But right here in South Africa, one company has been reinventing itself: Altron. More from EasyAssetManagement's recent report on Altron.

Summary

• Altron’s group EBITDA rose to R1.7 billion, showing strong profitability momentum led by its platform businesses.
  
  

• While making up 41% of revenue, Altron’s digital platforms now drive most of its earnings ,signalling where future value lies.
  
  

• Sharper margins and capital allocation led to a higher payout and earnings per share, potential positive signals for income-focused investors.

Founded in 1965, Altron started off making TV components. Decades later, it’s a focused technology group with its sights set firmly on digital platforms, managed IT services, and electronic distribution. And while it might not be as flashy as some global names, Altron has delivered real returns.

Source: Altron FY25 Investor Presentation

From Hardware Roots to Digital Focus

Altron has undergone a major transformation. Over the last decade, it’s divested non-core businesses and shifted toward higher-margin, recurring-revenue tech services. The 2020 demerger of Bytes UK was a turning point, sharpening Altron’s identity as a South African digital solutions business.

Its strategy today revolves around three core areas:

• Platforms (Netstar, Healthtech and FinTech)
• IT Services (systems integration, cybersecurity, cloud, document solutions)
• Distribution (mainly electronic components and software licensing)

What makes this shift notable is the growing dominance of its Platforms segment, which now delivers over 80% of Altron’s operating profit, even though it contributes just 41% of revenue. That’s a clear signal of where the value lies.

The Strategy: Margin Over Mass

One of the most important pieces of the Altron puzzle is its intentional move toward high-margin, annuity-style revenue streams. Instead of chasing one-off hardware sales or low-margin system support contracts, Altron is putting its capital to work in businesses like Netstar, FinTech, and HealthTech, platforms that offer repeatable income, sticky customer relationships, and scalable infrastructure.

Source: Altron FY25 Investor Presentation

This shift has already paid off. These platform units consistently deliver EBITDA margins above 30%, far outpacing the group’s IT and distribution businesses.

More importantly, they’re mostly built around contracts and subscription models, providing greater visibility and resilience in uncertain economic conditions.

An important milestone in this strategy was Altron’s decision to exit the ATM support business in 2023. This segment, once a key part of Altron Managed Solutions, had become low-growth and capital-intensive, with shrinking relevance in a digital-first financial world. By divesting it, Altron freed up resources to focus on more scalable, higher-return opportunities.

Platforms: The Growth Engine

At the heart of Altron’s profitability is its Platforms division:

1. Netstar
   Altron’s telematics business is one of SA’s largest vehicle tracking and fleet management providers. Netstar delivered R935 million in EBITDA and R235 million in operating profit. It faces stiff competition from Cartrack (Karooooo) but continues to grow in its home market thanks to strong partnerships and scale.
   
   
2. Altron FinTech
   This business enables digital transactions, card personalisation, and credit solutions. It with its 36% in EBITDA margin, perhaps showing that SA’s digital payment ecosystem has room to grow and reward investors.
   
   
3. Altron HealthTech
   Altron HealthTech specialises in healthcare technology solutions working with hospitals, medical aids, and clinics. It posted a 31% EBITDA margin in FY2025, perhaps benefiting from digitisation trends across the healthcare industry.
   
   Combined, these platforms are Altron’s most profitable and scalable units, and they receive the lion’s share of the company’s investment capital.

The Rest of the Business: Support Acts with Potential

Altron’s IT Services division is a mixed performer. While its cybersecurity unit (Altron Security) showed some EBITDA margin expansion despite a top line decline, other parts, like its IT Services Business, faced margin pressure and project delays. Still, the segment delivered R230 million in operating profit.

Furthermore, Altron Document Solutions, best known for managing Xerox printing in Southern Africa, returned to profitability, however this business remains exposed to a structurally declining and commoditised industry.

 Source: Altron FY25 Investor Presentation 

Altron Arrow (Altron’s Distribution business), saw declining revenue but maintained profitability by gaining market share and keeping costs in check.

By the Numbers

Altron delivered a strong set of results for the year ended February 2025, with group EBITDA jumping 69% to R1.7 billion and operating profit (before capital items) more than tripling to R817 million.

From continuing operations, EBITDA rose 27% to R1.8 billion and operating profit (before capital items) climbed almost 50% to R972 million, driven by a standout performance from the Platforms segment.

Headline earnings per share (HEPS) increased 73% to 178 cents, while net cash on hand surged 58% to R993 million.

The board declared a final dividend of 50 cents, up 52% from the prior year. It seems like a clear sign that Altron’s shift toward higher-margin, annuity-based platform businesses is paying off. Altron’s recent performance shows why it’s attracting attention:

Despite its strong run (total return of more than +80% over the past year), Altron still trades at relatively modest valuation multiples especially when compared to global tech peers. Its solid dividend (12-month yield of 3.97%), strong cash flows, and high margin growth segments may potentially offer a compelling case for investors looking for exposure to the South African tech sector.

Investment Case: The Upside and the Trade-Offs

Altron gives you exposure to several high-growth tech sectors—telematics, fintech, and healthtech —under one roof. But that comes with complexity. The group still carries lower-margin businesses that may be seen to have a dilutive effect on overall returns and make it harder to value on a pure-play basis.

If you want diversified exposure to the local digital economy, Altron delivers that in one package.

Final Thoughts

Altron is an intriguing South African tech play. While the company faces its share of challenges, its high-margin, fast-growing Platforms segment seems to be driving a profitability transformation. The recent share price performance reflects market optimism around this strategic shift.

For investors seeking local tech exposure via a business that generates solid cash flow, pays dividends, and has a credible plan to grow margins, Altron warrants a closer look.

Looking to diversify?

EasyAssetMangement holds Altron in our EasyETFs Balanced Actively Managed ETF . If you are looking for exposure to global or AI themed equities check out our EasyETFs Global Equity Actively Managed ETF and our EasyETFs AI World Actively Managed ETF

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