Risks: increased competition; macroeconomic factors.

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We begin our analysis of Positive Technologies (PJSC Positive Group), a player in the fast-growing market of cybersecurity services and solutions and one of the main beneficiaries of the large-scale transformation of this market, with a "Buy" rating.

The company's shares are actually the only opportunity to invest in this sector on the Russian stock market. Business growth is predetermined by the growing interest of Russian companies in protecting their infrastructure, the increase in the market share of domestic vendors, as well as the need to switch to domestic solutions. As a result of the DCF model assessment, we received a target price of RUB 2,800 per share, which implies a 28% return by the end of the year.

Catalysts: growth of the hungary whatsapp resource market as a whole and the share of domestic vendors in it; regulatory requirements; government support.


A market with good prospects for long-term growth. The Center for Strategic Research (CSR) estimates the average annual growth rate of the cybersecurity solutions and services market (CAGR 2024–2027) at 24%, and its capacity at the end of the period at RUB 559 billion. The main catalysts will be the growing number of attacks and the interest of corporate and government clients in ensuring the protection of information and digital infrastructure. In addition, the state now requires the use of domestic solutions for critical information infrastructure facilities and is tightening requirements for information security, which, coupled with the departure of global vendors, will increase the demand for solutions and services from Russian suppliers.

A key market player offering a wide range of solutions and services. Last year, the company ranked second in revenue in the information security market and was among the top five largest providers of information security services. Positive Technologies already offers about 20 products and is developing a promising next-generation firewall (NGFW), the commercial launch of which is scheduled for 2024.

The company demonstrates impressive business growth, combining it with high profitability. In particular, in 2022, the "Shipments" indicator grew by 88% y/y, reaching RUB 14.5 billion. Revenue increased by 95% to RUB 13.8 billion. According to the results of 1H23, shipments grew by 43% y/y to RUB 4.6 billion, while in 2Q23 the growth rate was 71% y/y. The business is characterized by seasonality, as a result of which the main revenue is generated in the second half of the year and the fourth quarter. Adjusted EBITDA margin in 2022 was at the level of 50%. We also note good balance sheet indicators: at the end of 2022, the net debt to EBITDA ratio was about 0.1.

The growth prospects are not yet fully priced in. Based on the DCF model, where we use a WACC of 16%, we have a target price for the end of this year of RUB 2,800 per share. At current price levels, this implies a yield of 28% until the end of 2023, even after strong growth of the stock during the year. Therefore, we begin our analysis of Positive Technologies with a Buy rating. The company's shares are currently trading at P/S 2024P of 4.2 and EV/EBITDA 2024P of 9.2, which seem justified given the impressive growth rates of the business.