Elders Limited

Elders is one of the more straightforward investment propositions on the ASX for investors who understand the agricultural cycle. It is not a growth-at-any-price story, nor a deep value turnaround – it is a mature, diversified agribusiness in the early stages of a meaningful earnings re-rating driven by a combination of cyclical recovery and structural expansion. The Delta acquisition is genuinely transformative in scale. More than 300 rural stores, deep agtech capabilities, and expanded geographic coverage in WA and NSW give Elders a competitive moat that will be exceptionally difficult for any rival to replicate. The integration risk is real – absorbing a $475 million acquisition while simultaneously rolling out a new retail operating system is not trivial – but management’s track record over the past decade of disciplined execution provides some reassurance. The valuation is not demanding. The stock trades at a forward P/E of around 13 times and an EV/EBITDA of roughly 8.4 times, modest multiples for a business with genuine earnings momentum, a fully franked dividend, and exposure to what management describes as the most constructive agricultural backdrop in several years. The 36 cents per share total FY25 dividend represents a yield of around 4.5% at current prices, which is not eye-catching but becomes more interesting on a grossed-up basis for Australian taxpayers. The key risk is the weather. Elders cannot insulate itself entirely from drought, as FY25’s retail division demonstrated; and a second consecutive dry year in southern Australia would pressure the recovery thesis. Net debt of $457m following the Delta acquisition also warrants monitoring, though leverage of 2.9 times EBITDA is manageable and expected to unwind quickly given strong cash generation. For long-term investors comfortable with agricultural cyclicality, Elders at current prices offers compelling risk-adjusted exposure to a uniquely Australian franchise.