WHERE TO INVEST: Can iOCO deliver on turnaround promises and unlock future growth?
After a dramatic recovery from its EOH legacy problems, ICT services provider iOCO faces a crucial test: allocate forecast cash flow wisely while growing its core businesses.
ICT services provider iOCO, formerly known as EOH, has undergone a significant turnaround on the JSE. The business, once plagued by legacy issues, is now focused on future growth rather than crisis survival. The company has seen a remarkable increase in its share price, more than quadrupling from R4.00 in 2024 to a peak of R4.80 in 2026. However, the price has since settled at R4.00, trading at a price-to-earnings (P/E) ratio of around 7x, which is typical for a mid-cap on the JSE.
The earnings per share (EPS) jump in 2026 was not solely due to revenue growth, as the group only increased its revenue by 3%. The main driver was a 6.4% decrease in operating costs, leading to a 21% rise in adjusted core profits (EBITDA). Despite this, gross profit margins decreased slightly, and gross profit in rand terms declined by 0.8%.
The turnaround has been made possible by eliminating loss-making business units and reducing net interest-bearing debt from over R2-billion in FY21 to just R480-million in FY26. Investors who entered the stock after the capital raise are now benefiting from the company's improved financial position. Management has guided a significant capital allocation of R1.15-billion over the next two years, with potential further acquisitions ranging from R60-million to R600-million.
Written by urgent.news from Daily Maverick's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
