This report is an updated version of the report published on 24 July 2025 at 11:27 AM AEST.

Elders Limited (ASX: ELD)
Elders Limited is an Australian agribusiness offering rural retail and wholesale products, livestock and wool agency services, and real estate solutions. The company also provides digital trading platforms, financial services, and operates in agricultural chemical formulation and cattle feed lotting. With its regional presence, Elders focuses on integrated services and strategic investments to support rural and agribusiness customers. 

Recommendation Rationale – SELL at AUD 7.400

• Technical Standpoint: ELD’s share price has exceeded the R2 resistance level recommended on 17 July 2025, delivering a 14.91% gain since the previous recommendation. However, the 14-day Relative Strength Index (RSI) is now at approximately 78.55, placing the stock in overbought territory. This suggests the recent price rally may be overextended, increasing the likelihood of near-term consolidation or a technical pullback.
• Margin Headwinds from Product Mix and Market Conditions: Crop protection margins were compressed in the first half of FY25 due to lower volumes and increased competition, particularly in drought-affected regions of South Australia and western Victoria. A shift toward lower-margin fertiliser sales further pressured group profitability.
• Cash Flow Deterioration: Cash conversion plummeted to 82% in 1HFY25 (1HFY24: 339%), or just 3% on an AASB 16 adjusted basis (1HFY24: 157%). This deterioration underscores inefficiencies in capital deployment and working capital control.
• Working Capital and Leverage Concerns: The working capital to sales remained elevated at 20% in 1HFY25 (1HFY24: 22%), with net debt rising due to five acquisitions, transformational capex, and balance sheet lending. Short-term debtor volatility in the livestock segment added further strain.

ELD Daily Chart

(Source: REFINITIV; Analysis by Kalkine Group)

Valuation Methodology: Price/Cash Flow Approach (FY Sep'26E) (Illustrative)

The stock might trade at a slight premium to its peers given Elders’ diversified agribusiness platform and visible margin improvement trajectory. Underlying EBIT rose 67% year-on-year in 1HFY25, supported by margin uplift in the livestock and real estate segments. In addition, the ongoing systems modernisation program, with full benefits expected in FY26, is anticipated to enhance process efficiency.          

For conducting the valuation, the following peer companies have been considered: Bega Cheese Ltd (ASX: BGA), Graincorp Ltd (ASX: GNC), Inghams Group Ltd (ASX: ING) and others.

Considering that the stock has surpassed its R2 level, macroeconomic uncertainty, rally in share price movement, current trading level, and risks associated, the share price can face consolidation at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current price of AUD 7.400 (as of 24 July 2025, at 10.31 AM AEST).

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 24 July 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Kalkine reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 25-30 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Note 5: Dividend Yield may vary as per the stock price movement. 

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.