GrainCorp Ltd (ASX: GNC) shares suffered a horrible week last week.
The company is an integrated grain and edible oils business.
It is the largest grain storage and handling business in ECA and the number one edible oil processor and oilseed crusher in Australia and New Zealand.
On Wednesday, its stock price fell as much as 20%, before recovering to end the day down 12%.
Its share price fell again on Thursday and Friday, to end the week down more than 16%.
Image source: Getty Images
Why did the share price fall?
Shareholders were dumping GrainCorp shares last week after it announced the sale of non-core asset GrainsConnect Canada.
According to the media release, GrainCorp and Zen-Noh Grain Corporation have agreed to sell their joint venture GrainsConnect to Parrish & Heimbecker for C$150 million on a cash-free, debt-free basis, following a strategic review prompted by challenging financial performance.
GrainCorp expects to recognise a loss of approximately A$5–10 million, with no impact on its through-the-cycle EBITDA, and completion of the transaction is anticipated in the first half of 2026.
GrainCorp's Managing Director and CEO, Robert Spurway, commented:
This transaction reflects GrainCorp's ongoing commitment to portfolio optimisation and our readiness to rationalise assets where necessary to improve returns.
Divestment of GrainsConnect allows GrainCorp to focus on alternative value-creating opportunities that are in the best interests of our shareholders.
Following the sell-off, there could be an opportunity for investors to swoop in and snap these shares up at a discount.
Here's Morgans view.
GrainCorp shares oversold
In a note out of Morgans on Thursday, the broker said grain receivals have been lower than expected and the grain trading margin environment has deteriorated.
We have reduced our below consensus FY26 EBITDA forecast by 7%. With payments to the insurer no longer required in big crop years, GNC's strong fixed cost leverage should return when crop production issues around the world ultimately eventuate.
The team said while GrainCorp is lacking near-term share price catalysts, it believes the stock has been oversold.
Morgans maintains its accumulate recommendation with a new price target of A$8.05.
From Friday's closing price of $7.04, this indicates an upside of 14.35%.
Morgans isn't the only broker suggesting GrainCorp shares could be a value.
Macquarie has a price target of $8.30, suggesting roughly an 18% upside.
