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Orica Ltd

ORI: XASX (AUS)
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Morningstar Rating for Stocks Fair Value Economic Moat Capital Allocation
A$56.00BpjBykytlh

Orica: Acquisition of Terra Insights Value-Neutral

We maintain our AUD 16.50 per share fair value estimate for no-moat Orica, with shares trading in a range we consider fairly valued. Orica has announced it will acquire Terra Insights, a sensor and software monitoring platform used in mining and infrastructure. The acquisition is set to be completed in the second half of fiscal 2024, and we expect an immaterial contribution to sales in fiscal 2024 and no contribution to earnings due to implementation costs. However, from fiscal 2025, we estimate Terra Insights will contribute around AUD 100 million of revenue and AUD 40 million of EBITDA, a margin similar to Orica’s existing GroundProbe business.

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