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EBITDA declines ~28% YoY; OPM contracts 3.5pp YoY

* LG Electronics India’s (LGEIL) EBITDA declined ~28% YoY and stood at INR5.5b (-24% QoQ). Revenue/PAT was +1%/-27% YoY and stood at INR61.7b/INR3.9b(-1%/-24% QoQ). OPM stood at ~9% (-3.5pp/-2.6pp YoY/QoQ).

* Margin contraction was driven by higher commodity costs and increased investments in festive go-to-market initiatives aimed at supporting distributors amid challenging market conditions. The company though, further improved it market share it TV (~28%), Refrigerators (~30%), RAC (~17%), Washing Machines (~33%).

* We have a BUY rating on the stock. However, we will review our assumptions after the concall on 14th Nov’25.

Revenue up ~1% YoY; OPM at ~9% (down 3.5pp YoY)

* LGEIL’s consol. revenue/EBITDA/Adj PAT stood at INR61.7b/INR5.5b/INR3.9b (+1%/-28%/-27% YoY; -1%/-24%/-24% QoQ). OPM stood at ~9% (-3.5pp/-2.6pp YoY/QoQ) in 2QFY26. Depreciation and interest income were -4%/+37% YoY. Other income was +19% YoY.

* Segmental highlights: a) Home Appliances & Air Solutions (H&A) segment – Revenue was flat YoY at INR39.5b (-20% QoQ), and EBIT declined 32% YoY to INR3.2b (-42% QoQ). EBIT margin contracted 3.9pp YoY at 8.2% (-3.3pp QoQ); b) Home Entertainment (HE) – Revenue rose 3% YoY to INR22.3b (+64% QoQ) , while EBIT declined 10% YoY to INR2.8b (+32% QoQ). EBIT margin contracted 1.8pp YoY to 12.6% (-3.1pp QoQ)

* In 1HFY26, Revenue/EBITDA/Adj PAT stood at INR124.4b/INR12.6b/INR9.0b, which was flat/-26%/-26% YoY. OPM contracted 3.5pp YoY and stood at ~10%. OCF stood at INR10.3b vs INR14.2b in 1HFY25. Capex stood at INR5.9b vs INR1.5b. FCF stood at INR4.4b vs INR12.7b in 1HFY25.

Management commentary

* In the H&A segment, LGEIL reinforced its leadership in Q2FY26, gaining share across key categories. Despite temporary GST-related purchase shifts, strong brand equity and channel strength drove premium growth, with side-by-side refrigerator share rising to ~43%. Margins were impacted by higher input and recycling costs, and festive spends. Looking ahead, demand is expected to stay strong, supported by the GST rate cut and festive momentum. With a two-track strategy of expanding LG Essential for value seekers and introducing new premium ranges, the company aims to capture niche demand and drive growth in underpenetrated markets.

* The HE segment saw strong festive led demand in the TV category, though the B2B business was impacted by US tariffs and weak global infra spending. Despite these challenges, the company strengthened its leadership, with OLED market share rising to ~63%, reinforcing dominance in the premium TV segment. The Indian TV industry continues to grow, aided by festive demand, GST rate cuts, and rising adoption of smart, larger screen TVs. It aims to further expand its premium portfolio (e.g., QNED, OLED) and strengthen its B2B presence by leveraging India’s growing infrastructure sector. EBIT margins were affected by higher input costs and market investments.

Valuation and view

* After a challenging quarter marked by subdued market conditions, LGEIL reported a contraction in margins. However, the company remains optimistic about the outlook, supported by festive and wedding season demand and its plans to expand in the B2B segment.

* We have a BUY rating on the stock. However, we will review our assumptions following the concall on 14th Nov’25 (Concall Link).

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