IGI Logo

LG Electronics India (LGEIL) delivered a strong 1Q, with topline growth accelerating to 15% yoy (vs 8% in 4QFY26), led by broad-based double-digit growth across categories, mainly HE (Home Entertainment), which grew 22% yoy, (EBITM at 19% vs 13% qoq). The strong operating print (EBITDA growth of 26% yoy vs 10% decline in 4Q) led to 19%/23% EBITDA/PAT beat vs our estimates. Going ahead, LGEIL remains confident of broad-based growth (midteens revenue), led by premiumization, with TV (strong sell-out trend expected, with early channel stocking ahead of the festive season) and WM (monsoondriven consumption in 2Q alongside festive pre-stocking) expected to be key contributors in 2H, while exports (up 30% yoy; better margins vs domestic), Essential Series, and B2B (targeting ~20% CAGR) provide additional levers. LGEIL is targeting localization of ~65% over the next 3–4 years (vs 55% in FY26), reducing import dependency and improving margin stability. We raise our FY27E EPS by 3% following the strong 1Q print. Maintain BUY and lift our TP by 8% to Rs2,050 (from Rs1,900) based on 50x Jun-28E PER (roll-forward).

Strong 1Q led by Home Entertainment segment

LGEIL posted a robust 1Q, with revenue growth at 15% yoy (vs 8% in 4QFY26), led by strong traction across product categories, especially HE segment, which grew 22% yoy (EBITM at 19% vs 13% in 4QFY26). Home Appliances saw healthy growth of 14%, with EBITM resilient at 11.6%. This led to an EBITDA/PAT beat of 19%/23% vs our estimates.

Earnings call KTAs

1) 1Q growth was portfolio-wide, with all major categories delivering double-digit growth rather than relying on one strong category.

2) Consumer preference is shifting toward higher-value, feature-rich, and energy-efficient products. In TVs, 55-inch+ models grew ~53% yoy (~50% of LG's TV business, with OLED TV/overall TV market share at ~59%/26%). In refrigerators, French door/side-by-side products are seeing strong growth. In WM, 8kg+ and AI DD models are outperforming. In RACs, 5-star inverter models are benefiting from premiumization.

3) Essential Series crossed 0.5mn units in 1HCY26, exceeding initial expectations, with margins largely in line with the broader B2C portfolio.

4) Export revenue grew 30% yoy in 1Q despite a challenging global environment, with LGEIL expanding its export footprint from ~45–47 countries around its IPO to 65 countries now. The strategy involves exporting premium products (largecapacity freezer and side-by-side refrigerators) to developed markets (US, EU), while Essential Series products are exported to emerging markets (Asia, Middle East, and Africa).

5) LGEIL is investing ~Rs50bn in its Sri City plant, with compressor production to commence in 3QFY27, followed by RAC in 4QFY27 (likely to ~2x LGEIL’s manufacturing capacity). Capitalization is expected to begin in 2HFY27. While ramp-up may entail some costs, LGEIL expects in-house manufacturing efficiencies to offset initial investments.

6) It targets ~65% localization in the next 3-4 years (vs 55% in FY26).

7) Within B2B, LGEIL is confident of achieving ~20% growth CAGR, led by Information Display, where LG’s LED signage market share has reached ~36%, with a ~5% lead over the #2 player).

For More  Emkay Global Financial Services Ltd Disclaimer http://www.emkayglobal.com/Uploads/disclaimer.pdf & SEBI Registration number is INH000000354