This report is an updated version of the report published on 9 May 2025 at 1:03 PM AEST.

Orica Limited (ASX: ORI)

Orica Limited (ASX: ORI) is an Australia-based mining and infrastructure solutions provider. The Company is engaged in the production and supply of explosives, blasting systems, mining chemicals and geotechnical monitoring to its cutting-edge digital solutions.

Recommendation Rationale - SELL at AUD 18.480

• Surpassed Resistance: ORI has surpassed the ‘Resistance 1’ level recommended on 28 February 2025. Therefore, ORI can face resistance at the current levels.
• Overvalued Multiples: On a forward 12-month basis – key trading multiples (EV/EBITDA, Price/Earnings, Price/Cash Flow, and Price/Book) are higher than average of the Chemicals industry.
• Statutory Net Loss Due to Significant Impairments: Orica reported a statutory net loss after tax of AU$89 million for the half year ended 31 March 2025, a sharp reversal from a profit of AU$337.5 million in the prior year. This loss was primarily driven by after-tax writedowns and restructuring costs totaling approximately AU$340 million. These significant items included an impairment expense of AU$288.4 million and restructuring costs of AU$41.0 million, mainly related to the Latin America blasting solutions business and the Europe, Middle East, and Africa (EMEA) region.
• Net Debt Increase: Net debt increased by AU$247 million YoY by the end of H1 FY25, rising to approximately AU$1.9 billion, which could raise concerns about leverage and future financial flexibility.

Daily Price Chart

Daily Technical Chart, Data Source: REFINITIV

Valuation Methodology: Price/Cash Flow Approach (FY Sep'26E) (Illustrative)

ORI is expected to trade at a slight premium to its peers considering the 40% and 32% YoY increase in EBIT and Interim Dividend in H1 FY25, respectively. For conducting valuation, the following peers have been considered: Amcor PLC (ASX: AMC), Nufarm Ltd (ASX: NUF), and BlueScope Steel Ltd (ASX: BSL).

Considering the rally in share price movement, current trading level, and risks associated, the share price can witness resistance at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current market price of AUD 18.480, as of 9 May 2025, at 12:10 PM AEST.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 9 May 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.    

Note 4: Kalkine reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 25-30 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Note 5: Dividend Yield may vary as per the stock price movement.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 7 May act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 7 May act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.