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EBITDA beat; margin expansion led by better product mix Broad-based growth supports positive outlook

* LG’s 1QFY27 revenue increased ~15% YoY to INR72.3b (in line). EBITDA grew ~26% YoY to INR9.0b (~8% beat). OPM expanded 1.1pp YoY to 12.5% (vs. est. of 11.8%). Adj. PAT rose ~27% YoY to INR6.5b (in line).

* Management remains positive on the demand outlook, with broad-based double-digit growth across categories in 1Q, and expects to sustain its ~20% growth trajectory. Margin expansion was backed by a richer product mix, calibrated price hikes and operating leverage. The Sri City expansion will drive scale and localization benefits over time. Washing machines and TVs are expected to drive 2HFY27 growth, while refrigerators and RACs should benefit from premiumization and replacement demand. B2B growth was healthy, led by HVAC and Information Display, while exports grew ~30% YoY to a record quarterly performance.

* We increase our EPS estimates by ~7%/10% for FY27/FY28 as we raise our revenue and margins projections. We value LG at 45x FY28E EPS to arrive at a TP of INR2,000. Reiterate BUY

Revenue up ~15% YoY; OPM up 1.1pp to 12.5% (est. 11.8%)

* LG’s consol. revenue/EBITDA/adj. PAT stood at INR72.3b/INR9.0b/INR6.5b (+15%/+26%/+27% YoY; in line/+8%/in line vs. our estimates). OPM increased 1.1pp YoY to 12.5% (vs. est. 11.8%). Depreciation and interest costs rose 24%/7% YoY, while other income grew ~27% YoY.

* Segmental highlights: a) Home Appliances & Air Solutions (H&A) revenue increased ~14% YoY to INR55.8b (in line), EBIT grew ~15% YoY to INR6.5b (in line), and margin remained flat YoY at 11.6% (vs. est. 12.0%). b) Home Entertainment (HE) revenue grew ~22% YoY to INR16.6b (+9% vs. our estimate), EBIT increased ~49% YoY to INR3.2b (~39% beat), and margin expanded 3.4pp YoY at 19.1% (vs. est. 15.0%).

Valuation and view

* LG has reported a better-than-estimated operating performance, mainly driven higher-than-estimated revenue and margin in its HE segment. The company has a well-diversified product portfolio across multiple categories to deliver growth across different demand cycles. We remain positive on LG’s long-term growth prospects, supported by broad-based category growth, premiumization, rising localization, strong brand positioning and increasing contribution from exports and B2B businesses.

* We estimate a CAGR of 13%/30%/32% in LG’s revenue/EBITDA/PAT over FY26- 28. We estimate the H&A segment’s revenue CAGR of ~13% over FY26-28E and margin at ~12%/13% in FY27/FY28 vs. ~10% in FY26. The HE segment’s revenue CAGR would be ~13% over FY26-28, and the margin is projected at ~16% in FY27/FY28 (each) vs. ~13% in FY26. Net cash balance is estimated to increase to INR59.7b by FY28 vs. INR44.8b in FY26. ROE/ROCE are estimated to improve to ~29%/30% in FY28 vs. 25%/26% in FY26. The stock currently trades at 41x/34x FY27E/FY28E EPS. We value LG at 45x FY28E EPS to arrive at a revised TP of INR2,000 (earlier INR1,800). Reiterate BUY.

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