Buy LG Electronics India; target of Rs 1900: Emkay Global Financial

buy

Emkay Global Financial' research report on LG Electronics India

We met the management of LG Electronics and visited its plant in Pune. KTAs: 1) LGE does not foresee any production disruption from the current LPG supply, on limited dependance in refrigerators and RACs being covered until Mar-26 and transition to PNG/diesel underway; vendors, however, are facing supply challenges. 2) RAC channel inventory has normalized following a weak prior season and de-stocking in Q3. 3) RAC demand is sensitive to temperature trends; the management highlighted that 10–15 days of peak summer can absorb up to 3M of channel inventory. 4) FY26 growth to be muted, but LGE is exiting the year with strong momentum via inventory build-up (expects doubledigit margin in FY26). 5) It is structurally gaining share via premiumization (premium mix at 29% vs industry’s 15-16%). 6) LGE took 7-9% price hike in RACs in Jan-26 and 2% in appliances post Diwali. 7) Expansion into the mass segment (via Essential range) to not be margin-dilutive due to cost engineering, calibrated outsourcing, and premium mix leadership. 8) LGE plans to scale exports (6% of revenue now) by 2x in FY27, including via certain shipments to the US and expanding in developing markets.

Outlook

We retain BUY and TP of Rs1,900, led by sustained domestic market-share gains, expectations of a better summer with normalized channel inventory, and gradual export traction in FY27, with the Sri City plant ramping up over FY27-29.

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LG Electronics India - 1803026 - emkay