Where the Turnaround Ends, Re-rating Begins
Arribatec Group ASA (“Arribatec” or “the Company”) is a Norwegian IT services provider offering ERP solutions, Business Services, and Cloud & IT operations, with an increasing share of revenues from long-term service contracts. Following a comprehensive turnaround in Q4-24, including a new management team, divestment of non-core segments, and approximately NOK 50m in cost reductions, the Company has regained momentum. Core operations delivered 20% organic growth year-over-year in Q3-25, alongside a sales mix shift toward the higher-margin Business Services segment, which reported a 13.8% EBITA margin versus 10.7% at group level and is underpinned by a strong recurring revenue base. As of Q3-25, the Company reported a gross weighted pipeline of NOK 421m, providing solid near-term revenue visibility. Combined with a leaner cost base and limited capital intensity, the turnaround has materially improved earnings quality and visibility. Based on an estimated EBITA of NOK 81m for the full year of 2027 and an equally weighted Peer- and DCF valuation, an implied enterprise value of NOK 841m is derived, corresponding to a potential share price of NOK 11.6 in a Base scenario.
- Completed Turnaround With Restored Operational Focus
Arribatec has transitioned from a fragmented group with exposure to non-core verticals to a more simplified organization focused on its core offerings within Business Services, Cloud & IT and EA & BPM. The divestment of non-core segments and a comprehensive cost-reduction program has structurally lowered the fixed cost base and improved operational discipline, addressing the underlying inefficiencies that previously constrained profitability. These measures have already translated into clearer operational improvements, reflected in improved margin performance, a more profitable sales mix, and strengthened execution across the core operation.
- Sales Mix Shifting Toward Business Services
Recent contract activity increasingly favors Business Services, the highest-margin segment with a strong share of recurring revenues. Over the past three quarters, the segment has accounted for 70% of contracted value despite representing 58% of reported sales, reflecting a continued positive mix shift. Year-to-date, Business Services delivered a 13.1% EBITA margin versus 8.4% at group level, supported by ongoing Unit4 ERP cloud migrations and Elite Partner status. As the segment is expected to grow, earnings visibility and margin sustainability are expected to improve structurally.
- Improving Fundamentals Not Yet Reflected In Valuation
The turnaround has materially improved earnings quality, with low capital intensity supporting strong cash flow conversion, where EBITA is estimated to track free cash flow close to 1:1. Despite this, Arribatec continues to trade at low single-digit EV/EBITA multiples, with the Company valued at approximately 7.5x 2026E EBITA. As profitability is estimated to stabilize and the new run-rate becomes clearer, the current valuation implies potential for a re-rating toward peer levels around 10x EV/EBIT.
