Buy LG Electronics India; target of Rs 1920: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on LG Electronics India

Home Appliances & Air Solutions reported flat revenue as purchases were temporarily deferred due to GST rate-cut announcement while margins were impacted by rising commodity costs and incremental festive go-to-market investments to support distributors and retailers, while the company continued to gain market share across major categories. Working capital increased sequentially due to higher inventory in compressor-led products and additional channel support. GST impact has eased, leading to normal channel inventory and an improving demand outlook. A strong push on premiumization, B2B expansion, and the new Essential series is expected to support medium-term growth. Sri City plant to begin RAC production by Oct’26, followed by compressors in Q4FY27 and other lines thereafter.

Outlook

LGEL’s RM localization stood at 55.8% in Q2FY26 and company expects to improve this by 2–3% annually and will support margin improvement over the next few years. We estimate FY25-28E revenue/EBITDA/PAT CAGR of 9.6%/10.0%/9.2%. Maintain ‘BUY’ rating with revised TP of Rs1,920 (earlier Rs1,780) based on 45x (Earlier 42x) FY28 EPS.

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LG Electronics India - 17112025 - prabhu