Buy LG Electronics India; target of Rs 1813: Prabhudas Lilladher

Buy

Prabhudas Lilladher's research report on LG Electronics India

We recently visited LGEL’s Pune plant in Maharashtra. The management indicated steady demand momentum led by RACs, with premium-led value growth and entrylevel segments supporting volumes. RAC inventory normalized in Q3FY26, but Q4FY26 performance remains contingent on summer intensity. The company is strengthening its portfolio through localization and exports, with component manufacturing for washing machines commencing at Noida and exports targeted to reach ~12% of revenue by FY27. Pune plant remains focused on premium products, while Noida plant caters to the mass and essential segments. Operationally, PNG transition is underway with negligible disruption risk, supported by minimal LPG dependency and alternative fuel availability. Growth visibility is supported by improving B2B traction (9-10% of revenue), premiumization, and a strong distribution network, although near-term demand remains weather dependent. Price hikes (7-10% in RACs; ~2% in refrigerators and washing machines), along with higher localization and limited outsourcing, are expected to support margins. Sri City expansion will enhance southern reach and improve logistics efficiency, supporting long-term growth.

Outlook

We tweak our FY27/28 earnings estimate and maintain ‘BUY’ rating, with revised TP of Rs1,813 (earlier Rs1,808) based on 45x FY28 EPS. We estimate FY26-28E revenue/EBITDA/PAT CAGR of 11.5%/24.2%/21.1%.

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LG Electronics India - 1903026 - prabhu