Should you subscribe to LG Electronics India IPO? Cheaper valuation, superior returns, market leadership

LG Electronics India’s Rs 11,607-crore IPO is priced at cheaper valuations than peers and comes with a superior returns profile and strong market leadership, according to SBI Securities. The brokerage has recommended subscribing to the issue, citing LG’s dominant position across multiple consumer durable categories, robust financial performance, and large-scale manufacturing and distribution capabilities.

LG Electronics India's mega IPO, which is entirely an offer for sale by Korea-based parent LG Electronics Inc, will open for bidding on October 7 and close on October 9. The issue has been priced in the range of Rs 1,080-1,140 per share, with shares scheduled to list on the BSE and NSE on October 14.

Market leadership and competitive strengths

SBI Securities said LG Electronics India has consistently been the number one player in India’s home appliances and consumer electronics market (excluding mobile phones) for four years running, up to the first half of calendar year 2025. The company leads across multiple categories including washing machines (33.5 percent share), refrigerators (29.9 percent), panel televisions (27.5 percent), inverter air conditioners (20.6 percent) and microwaves (51.4 percent) in the offline channel.

Also read: LG Electronics sets price band at Rs 1,080-1,140 per share for Rs 11,607 crore IPO

The brokerage said LG Electronics has 28 years of experience in India, which has allowed it to develop insights into local consumer preferences and adapt products accordingly. “Through this approach, it has introduced many industry-first technologies in the country like inverter OLED & 4K televisions, inverter ACs, microwaves, etc.,” SBI Securities said.

The note also highlighted the company’s pan-India distribution and after-sales service presence. As of June 2025, it operated more than 35,600 consumer touchpoints, 1,006 service centres, and had a team of 13,368 engineers providing same-day installations and maintenance.

Attractive valuation compared to peers

Valuation formed a key part of SBI Securities’ recommendation. At the upper end of the price band, the IPO is valued at a post-issue P/E multiple of 35.1x FY25 earnings. The brokerage said: “When compared to its closest peers, the company outshines them in most valuation parameters with superior return profile. We recommend investors to SUBSCRIBE to the issue.”

In FY25, the company reported a return on equity (RoE) of 36.9 percent and a return on capital employed (RoCE) of 50.1 percent. By comparison, Havells posted RoE of 17.7 percent, Voltas 12.9 percent, Blue Star 19.3 percent and Whirlpool 9.1 percent.

Financial performance

The brokerage highlighted LGEIL’s strong financial record. Between FY23 and FY25, the company delivered revenue CAGR of 10.8 percent, EBITDA CAGR of 28 percent, and PAT CAGR of 27.8 percent. Revenue rose from Rs 19,865 crore in FY23 to Rs 24,367 crore in FY25, while profit after tax grew from Rs 1,345 crore to Rs 2,203 crore in the same period.

EBITDA margins improved from 9.6 percent in FY23 to 12.8 percent in FY25, while PAT margins expanded from 6.8 percent to 9 percent. “LGEIL has one of the largest in-house production capabilities among peers in India making it a giant in the industry,” the brokerage said.

Risks and considerations

SBI Securities cautioned that the company remains exposed to certain risks. These include royalty fees payable to the parent (averaging 1.9 percent of revenue during FY23-FY25), volatility in raw material prices which account for more than 70 percent of revenue, and supplier concentration with over 30 percent of raw materials sourced from the top 10 suppliers.

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