Now could be the time to buy Orica Ltd (ASX: ORI) shares.
That's the view of Bell Potter, which has just initiated coverage on the ASX 200 stock.
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What is the broker saying about this ASX 200 stock?
Firstly, in case you are not familiar with Orica, it is a leading solutions provider to the global mining and infrastructure markets. This includes the manufacture and supply of explosives, blasting systems, speciality mining chemicals, and the provision of orebody intelligence, geotechnical and structural monitoring products and services.
Bell Potter highlights that the ASX 200 stock has gone through a transformation in recent years, which it is positive on. It said:
ORI has undergone a strategic pivot in recent years, transforming the company (through acquisitions) into a more diversified product and service provider, with emerging Speciality Mining Chemicals (SMC) and Digital Solutions (DS) segments to complement legacy Blasting Solutions (BS) operations. ORI expect to deliver an 80% / 20% EBIT split for Blasting / Beyond Blasting in FY25, compared with 86% / 14% in FY23, with aspirations declared to reach parity (50% / 50%; no timeline announced).
Partly due to this, Bell Potter believes that the ASX 200 stock is well-positioned for growth in the near term. Especially after its recent business update. It said:
ORI's Sep'25 Business Update outlined a continuation of positive momentum in 2H FY25, leading the company to guide for higher earnings across the three segments compared with the PcP. Looking forward, we expect current operating momentum to continue in FY26-27.
Market-beating returns
According to the note, the broker believes that Orica's shares could deliver attractive returns for investors over the next 12 months.
It has initiated coverage on the ASX 200 stock with a buy rating and $23.00 price target. Based on its current share price of $21.20, this implies potential upside of almost 9%.
In addition, the broker is forecasting a dividend yield of 3% over the period, which boosts the total potential return closer to 12%.
Commenting on its buy recommendation, Bell Potter said:
We expect ORI to grow underlying EBIT across each segment in the short-to-medium term. ORI is well positioned to deliver rapid de-leveraging over FY26-27 (in the absence of M&A), with scope for capital management to prioritise increasing shareholder returns via an extension to the share buy-back program and dividends.
