Why this broker thinks GrainCorp shares are a buy after yesterday’s fall

Graincorp Ltd (ASX: GNC) shares were making headlines yesterday after the company released updated FY26 guidance. 

GrainCorp provides handling, storage, marketing, logistics and agronomic services to the East Coast grain industry.

What did GrainCorp report?

• Reconfirmed FY26 underlying EBITDA guidance at around $200–240 million
• FY26 underlying NPAT expected within $20–50 million range
• Business Transformation Program to deliver $12 million run-rate benefits by end FY26
• One-off restructuring costs of $5 million incurred in FY26
• System transformation spend unchanged for 2H26 at $25 million; FY27 updated to $30–35 million.

Why did the share price fall?

As reported by my colleague Aaron Teboneras, GrainCorp announced its transformation program remains on track to deliver around $12 million in FY26 savings, ahead of its previous target. 

Its longer-term goal of adding $20 million-$30 million to through-the-cycle EBITDA by FY28 is unchanged.

However, the technology rollout has been delayed. Release 1 is now expected to go live in Q2 2027, versus H2 2026 previously. 

GrainCorp said the delay will reduce implementation risk, but FY27 spending is now expected to rise to $30 million-$35 million, about $30 million above its previous estimate.

Investors were seemingly unimpressed by the news, as GrainCorp shares fell 4% during yesterday’s session. 

The agribusiness has now seen its share price fall 22% over the last 12 months. 

Bell Potter sees greener pastures ahead for GrainCorp shares

Following the release, the team at Bell Potter provided updated guidance on GrainCorp shares. 

Commenting on the outlook for the company, the broker said GrainCorp’s FY26 guidance is broadly in line with expectations, with Underlying EBITDA expected around the midpoint of the $200-240m range, including $5m of restructuring costs from a review of the Agribusiness operating model. 

Commenting on the company’s adjusted outlook, the broker said near-term earnings are expected to be slightly lower because of a $5m restructuring cost. 

However, Bell Potter believes GrainCorp’s transformation program will ultimately deliver more savings than previously expected, which is why it raised its price target.

Buy rating retained 

Bell Potter’s report also reiterated a buy rating on GrainCorp shares. 

Additionally, the broker has upgraded its share price target to $7.50 (previously $7.15). 

Based on yesterday’s closing price, this indicates upside potential of almost 13%. 

Buy rating retained. The recent ABARE crop report was positive lead for FY27e and is yet to filter entirely through consensus expectations. However, the margin backdrop at this point, in terms of both grain basis and oilseed crush margins, remains the strongest it has for three years. To us this is key, as consensus FY27e expectations (which the 2026-27 crop underwrites) looks to be carrying forward the margin environment of FY25-26e, which was materially weaker. Trading at ~5.0x FY27e PBTDA we see the valuation as undemanding.

The post Why this broker thinks GrainCorp shares are a buy after yesterday’s fall appeared first on The Motley Fool Australia.

More reading

• GrainCorp shares fall after surprise $30 million cost increase
• GrainCorp keeps guidance steady as transformation delivers gains
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Motley Fool contributor Aaron Bell has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.