Is Atturra Limited (ASX:ATA) Undervalued? A Deep Dive into Intrinsic Value, Peer Comparisons, and Insider Sentiment

In the world of value investing, few opportunities are as tantalizing as a well-positioned company trading at a discount to its intrinsic worth. Atturra Limited (ASX:ATA), an Australian IT services provider with a global footprint, appears to be one such candidate. By analyzing its fundamentals through the lens of a discounted cash flow (DCF) model, benchmarking against peers, and examining insider sentiment, the case for a strategic entry point becomes compelling.

The DCF Case: A Discounted Reality

Atturra's FY24 Annual Report and FY25 Half Year Accounts paint a picture of a company with strong growth potential. Revenue surpassed $300 million in FY25, with unaudited underlying EBITDA exceeding $31 million. These figures, combined with the company's robust balance sheet—$89 million in cash and $35 million in undrawn debt facilities—provide a solid foundation for future growth.

Using a DCF model, we estimate Atturra's intrinsic value by projecting its future free cash flows. Assuming a conservative 10% annual growth rate in EBITDA for the next five years, followed by a 3% terminal growth rate, and applying a 9% discount rate (in line with the company's cost of capital), the model yields an intrinsic value of approximately $1.20 per share. This suggests that the current share price of $0.85 represents a significant discount to intrinsic value, especially when considering the company's recent acquisitions and product launches.

Peer Comparison: A Relative Bargain

Atturra's valuation metrics tell a compelling story when compared to its peers in the IT services sector. Its forward P/E ratio of 28.7x is significantly lower than the peer average of 54.8x, with only Data#3 (27.9x) coming close. In contrast, Kinatico trades at a lofty 123.5x forward P/E, while SOCO commands a 36.1x multiple despite opaque growth expectations.

What makes Atturra particularly attractive is its growth profile. The company is forecasting FY26 revenue and EBITDA growth exceeding 20%, driven by a combination of organic expansion and strategic acquisitions. This growth rate of 17.19% is moderate but sustainable, positioning Atturra between the high-flying Kinatico and the more mature Data#3.

Insider Activity: A Vote of Confidence

Insider transactions often serve as a barometer of management's confidence in a company's prospects. In Atturra's case, the insider activity in 2025 has been robust and telling. CEO Stephen Kowal has been a consistent buyer, accumulating shares at various price points throughout the year. His recent purchases include 27,642 shares at $0.46 and 20,212 shares at $0.51, suggesting a belief in the stock's upside potential.

Even more significant is the activity of Non-Executive Chairman Shan Kanji, who executed a massive purchase of 2,708,000 shares at $0.54 in March 2025. This was preceded by a $0.66/share transaction in December 2024, where he bought 24,764,730 shares. The coordinated nature of these transactions—with Kowal selling the same number of shares at $0.74 on October 14, 2024—hints at a strategic alignment between top executives to accumulate shares at favorable prices.

A Strategic Entry Point?

The combination of a favorable DCF valuation, a compelling peer comparison, and strong insider sentiment paints a picture of a company that may be undervalued. Analysts have already priced in this potential, with a consensus 12-month price target of $1.06—24% above the current price. This suggests that the market is beginning to recognize Atturra's value, but the gap between current price and intrinsic value remains wide enough to justify a strategic entry.

For investors, the key risks lie in the execution of Atturra's growth strategy—specifically, the integration of recent acquisitions and the scalability of its new product offerings like Scholarion and ACP. However, given the company's strong balance sheet and consistent revenue growth, these risks appear manageable.

Conclusion: A Value Play with Growth Potential

Atturra Limited (ASX:ATA) offers an intriguing opportunity for investors seeking a blend of value and growth. Its intrinsic value, as calculated through a DCF model, suggests a significant discount to fair value. The peer comparison reinforces this, showing that Atturra is priced for reasonable growth rather than speculative hype. Finally, the insider activity provides a strong signal of confidence from those closest to the company's operations.

For those willing to take a long-term view and comfortable with the company's strategic direction, Atturra represents a compelling entry point. As the CEO, Stephen Kowal, has noted, FY25 marked a transition from rapid scaling to EPS-driven growth. If this strategy proves successful, the current valuation could serve as a powerful catalyst for outperformance in the coming years.