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KAROOOOO LIMITED

KRO JSE Listed
Market Cap
~R23.8 billion

Investment Analysis: KAROOOOO LIMITED (JSE: KRO)

Date: 9 January 2026 Analyst: [Gemini]

⚠️ EXCHANGE NOTICE: Karooooo has a primary listing on the NASDAQ (Ticker: KARO) and a secondary inward listing on the JSE (Ticker: KRO).

  • Pricing: The JSE share price is effectively a derivative of the NASDAQ price, converted at the USD/ZAR exchange rate.
  • Dividends: Dividends are declared in USD. South African investors receive the ZAR equivalent, which fluctuates with the currency.

Step 1: Data Gathering & Source Verification

Step 2: Metric Extraction

  • Market Cap: ~R23.8 billion
  • Share Price: ~R770.00 (77,000 cents).

  • Note: Market cap fluctuates with the USD share price on NASDAQ.

  • Dividend Yield (L12M): ~2.9%

  • Declaration: A single annual dividend of USD 1.25 was paid in August 2025.
  • ZAR Value: At the time of payment, this equated to approximately R22.38 per share (depending on the spot rate used by the transfer secretary).

  • Policy: Karooooo typically pays dividends once a year, focusing on reinvestment for growth.

  • Liquidity Check: LOW / THIN (On JSE)

  • Average Daily Value (JSE): ~R4.0 million – R5.0 million.

  • Flag: Liquidity Risk. The vast majority of trading volume occurs on the NASDAQ. The JSE order book is often thin, meaning large local orders can cause significant price slippage.

  • P/E Ratio: ~23.3x

  • Calculation: Price (R770) / Annualized HEPS (~3,300 cents based on H1 2026 performance).

  • Context: High multiple reflects its status as a high-growth SaaS (Software as a Service) technology company, not a traditional industrial stock.

  • Net Asset Value (NAV): N/A

  • Reason: As a tech company, its value lies in its intellectual property and subscriber base (recurring revenue), not its physical assets.

Step 3: Operational & Strategic Analysis

Business Overview Karooooo is the holding company of Cartrack, a leading provider of real-time mobility data analytics (telematics). It operates a vertically integrated model, owning the entire value chain from the hardware (installed in vehicles) to the software platform.

  • Core Revenue: Subscription revenue (SaaS) accounts for 98% of Cartrack's revenue.
  • Growth Engine: Karooooo Logistics, a "Delivery-as-a-Service" platform, is scaling rapidly (revenue up 38%).

Performance Trend (Q2 2026 vs Q2 2025)

  • Revenue: Accelerating. Subscription revenue grew 20% to R1.18 billion (up from 15% growth in the prior year).
  • Profitability: Robust. Operating profit increased 18% to R356 million.

  • Rule of 60: Karooooo meets the "Rule of 40" (Growth + Margin > 40%) easily, actually exceeding 60%, which is elite for a SaaS company.

  • Subscribers: Total subscriber base grew 15% to 2.5 million, with net additions of 71,000 in the quarter.

  • Regional Mix: While South Africa remains the cash cow, Southeast Asia is the fastest-growing region, validating the global expansion thesis.

Sector Context

  • Macro Factor (The "SaaS" Premium): Unlike most JSE stocks which are tethered to the struggling SA economy, Karooooo is valued as a global tech stock. Its share price correlates more with US tech sentiment and the USD/ZAR exchange rate than with SA interest rates or GDP.

Step 4: The Verdict

  • Bull Case (The Compounder): Predictable Growth. Karooooo is a "boring" tech company in the best way. It has a 95% commercial retention rate, meaning revenue is sticky and predictable. The acceleration in subscription revenue (from 15% to 20%) suggests the investment in sales teams in Asia is paying off. You are buying a company with zero debt, high cash conversion, and a massive runway for growth in unpenetrated Asian markets.
  • Bear Case (The Valuation Ceiling): Priced for Perfection. At 23x earnings, the stock is expensive compared to the JSE average (10x). Any slowdown in subscriber growth—or a strengthening of the Rand (which hurts reported earnings)—could trigger a sharp de-rating. Furthermore, the low liquidity on the JSE makes it difficult to exit large positions quickly.
  • Fair Value Estimate: R820.00 – R850.00

  • Basis: A 25x multiple on forward earnings is justifiable given the 20%+ growth rate and high quality of earnings (SaaS).

  • Final Rating: BUY

  • Strategy: This is one of the few true "growth" stocks available on the JSE. It serves as an excellent Rand hedge and technology play. Ideally, buy on dips caused by Rand strength.
AI Generated Analysis Last Updated: 2026-01-14