Ahead of listing, Motilal Oswal and Emkay Global initiate coverage on LG Electronics India with strong upside potential

Shares of LG Electronics will be listed on the bourses today. 

Domestic brokerages Motilal Oswal Financial and Emkay Global, have initiated coverage on LG Electronics, with strong Buy rating, Motilal Oswal said India’s home appliances and consumer electronics market (excluding mobile phones) is estimated to post a CAGR of about 14 per cent over CY24-29. “LG Electronics India (LGEIL), with its leadership across key product categories, is well-positioned to capitalise on this growth opportunity. The company plans to balance between premium and mass products as part of LG’s global strategy and aims for premiumisation of mass products, which should help to improve affordability and, in turn, increase its customer base,” it said.

 The company plans to raise its export share to about 10 per cent by FY28E from 6 per cent in FY25. “It also aims to generate 14-15% of its revenue from the B2B segment over the next few years (vs. ~10% in FY25), noting that B2B margins are higher than those in the B2C segment. Further, LGEIL targets an over 25% YoY growth in AMC revenue for the next few years,” it added.

LGEIL’s strategic focus on premiumisation has resulted in innovative launches across OLED TVs, inverter ACs, and advanced smart appliances. The company holds strong market positions in premium segments, such as OLED TVs (~63%), front-load washing machines (~37%), and side-by-side refrigerators ( about 43 per cent). The share of raw materials sourced domestically stood at ~54% in FY25, with plans to increase this to ~63% over the next four years. This will also lead to an improvement in gross margin.

According to Motilal Oswal, Distribution remains a key competitive strength for LGEIL, with 35,640 B2C touchpoints, 777 exclusive brand shops, and 463 B2B trade partners in 1QFY26. The company also operates one of India’s largest after-sales networks, comprising 1,006 service centres. It allocates ~4.5% of its revenue to advertising and promotion (A&P) expenses, which we expect to continue until FY28.

“ We expect LGEIL to trade at higher multiples, given: 1) strong return ratios (RoE/RoIC of ~30%/66% in FY28E); 2) higher OCF conversion, averaging ~74% during FY26-28E; 3) a strategic focus on localisation, which is expected to further expand gross margin; 4) targeted growth in high-margin B2B and AMC business; and 5) a leadership position across key product categories,” it said adding that “We initiate coverage on LGEIL with a Buy rating and a TP of Rs 1,800, premised on 40x FY28E EPS.”

Key downside risks, according to Motilal Oswal, are: any increase in royalty by the parent company, LG Electronics Korea, volatile raw material prices, and intensifying competition.

Emkay Global Research said: We initiate coverage on LG Electronics India (LG) with BUY and TP of Rs2,050 (80% upside), at 50x Sep-27E PER (at 10% premium to Havells).”

LG has, over the last 3 decades, built a formidable franchise, which leads in key large appliance categories with premium positioning, leveraging its global R&D strength, brand power, and superior execution, it said.

“Following the parent’s ‘Global South’ strategy (announced in Jul-25;  link) of driving global growth, India (the largest appliance market for the parent outside the US, Korea) would play an important role and is likely to contribute 1/3rd of global growth over 5Y; on expansion into mass-premium categories (refer to LG Korea’s 1QCY25 earnings call; link), a higher focus on B2B (HVAC, information displays, etc), and rising exports, India would emerge as a key exports hub with start of the third plant in FY27E and localized innovation-led launches. This, amid signs of demand revival, is set to accelerate LG’s growth, with 13% revenue CAGR over FY26E-28E translating into 14% EPS CAGR, robust average RoE/RoCE of ~32%/44%, coupled with net cash of Rs37bn in FY25 (~Rs5,000 crore in FY28E), FCFE yield (basis sales) of 7.6% by FY28E, and an average dividend payout of 65% (FY27E-28E),” it added.

Key risks are Continued industry-wide demand slowdown, rise in competition, said Emkay Global.

Published on October 14, 2025