Orica Ltd (ASX: ORI) shares have been strong performers this year.
Since the start of the year, the ASX 200 stock has risen by a sizeable 40%.
Can it keep rising? Let's see what Bell Potter is saying about this commercial explosives company.
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What is the broker saying about this ASX 200 stock?
Bell Potter was pleased with Orica's performance in FY 2025, noting that its earnings came in ahead of expectations thanks to its Speciality Mining Chemicals and Digital Solutions segments. It said:
The FY25 result update was headlined by a 2% uEBIT beat to BPe. […] Blasting Solutions EBIT grew 15% YoY (-3% below BPe), reflecting a non-repeat KI turnaround (in the PcP) and a $15m carbon credit, greater product takeup and re-contracting benefits, partially offset by weaker coal demand. Speciality Mining Chemicals EBIT increased 47% YoY (3% ahead of BPe) due to a full year of contribution from Cyanco and strong demand for sodium cyanide from gold markets. Digital Solutions EBIT lifted 32% YoY (3% ahead of BPe) on rising exploration activity and strong conversion of cross-selling opportunities within Geosolutions.
The broker also notes management is expecting its earnings to grow in FY 2026 and has upgraded its medium term growth targets. It adds:
Group uEBIT is expected to grow in FY26 (6.3% BPe). Blasting Solutions is forecast to see further re-contracting benefits, offset by weaker demand from the US and Indonesian coal markets, the major Carseland facility turnaround (scheduled for early 2H FY26) and a non-repeat $15m carbon credit benefit. Expanding global exploration activity and further cross-selling opportunity conversion is expected to support Digital Solutions. Speciality Mining Chemical EBIT is anticipated to strengthen on strong demand for sodium cyanide from gold customers and higher manufacturing facility output as Winnemucca ramps-up. The upgrade to medium term segment annual EBIT growth targets is encouraging.
Should you invest?
According to the note, the broker has responded to the result by retaining its buy rating on the ASX 200 stock with an improved price target of $26.00.
Based on its current share price of $23.40, this implies potential upside of 11% for investors over the next 12 months.
In addition, the broker is expecting a dividend yield of 2.8% in FY 2026, which boosts the total potential return to approximately 14%.
Bell Potter concludes:
ORI is well positioned to deliver EBIT growth in the short-to-medium term, underpinned by cyclical tailwinds in mining and exploration markets. EBIT growth will also be supported by further premium product uptake, strong facility performance across AN and sodium cyanide supply networks and commercial discipline. The upgraded medium term RONA target to 13.5-15.5% (prev. 13.0-15.0%) and the $100m buy-back extension (to be completed by March 2026) are positive developments.
