We came across a bullish thesis on Ituran Location and Control Ltd. (ITRN) on Substack by Silba. In this article, we will summarize the bulls’ thesis on ITRN. Ituran Location and Control Ltd. (ITRN)’s share was trading at $37.82 as of May 16th. ITRN’s trailing P/E was 14.01 according to Yahoo Finance.
A technician at a workstation, soldering electronic components for vehicle tracking devices.
In the mid-1990s, Tel Aviv’s rampant vehicle theft created a costly burden of insurance premiums and losses. Izzy and Eyal Sheratzky, leveraging their background in insurance investigations, acquired advanced but underutilized military-grade tracking technology and transformed it by pioneering a subscription-based leasing model. This shift from costly upfront hardware sales to affordable, recurring monthly fees established an early “Security-as-a-Service” business, turning a major theft issue into a predictable and scalable revenue stream. As their network expanded across Israeli cities, theft rates declined due to deterrence and network effects, while partnerships with insurance companies and banks reduced customer acquisition costs, accelerating growth.
Rebranded as Ituran, the company strategically focused on Latin America—particularly Brazil and Argentina—where high crime rates and a growing middle class drove urgent demand for vehicle security. Brazil alone accounted for about 25% of revenues by 2024. Ituran’s vertically integrated model, which includes manufacturing, installation, and physical vehicle recovery, set it apart from competitors offering primarily software solutions. Financially, Ituran’s 2.4 million subscribers generated $336 million in revenue with 7% growth in 2024, supported by strong subscription gross margins near 59% and EBITDA margins around 27%. The company’s balance sheet is healthy with over $77 million net cash and minimal debt, aided by a favorable cash conversion cycle that effectively uses “other people’s money” to fund operations. Ituran commands roughly 80% market share in Israel backed by government pricing and installer certification monopolies, while Brazil offers growth despite tighter margins. Challenges include costly hardware upgrades from the 2G shutdown and risks of partners internalizing services. Despite these, Ituran is evolving into a high-growth subscription business with accelerating subscriber gains, operating leverage, and a clear path to $100 million EBITDA, positioning it for a potential valuation rerating as the market recognizes its unique growth and resilient cash flow model.
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