Buy LG Electronics India; target of Rs 2050: Emkay Global Financial

Emkay Global Financial' research report on LG Electronics India

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. 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 FY26E28E translating into 14% EPS CAGR, robust average RoE/RoCE of ~32%/44%, coupled with net cash of Rs37bn in FY25 (~Rs50bn in FY28E), FCFE yield (basis sales) of 7.6% by FY28E, and an average dividend payout of 65% (FY27E-28E).

Outlook

We initiate coverage on LG Electronics India (LG) with BUY and TP of Rs 2,050 (80% upside), at 50x Sep-27E PER (at 10% premium to Havells).