IGI Logo

BACKGROUND

LG Electronics India Ltd (LGEIL) is one of the leading players in major home appliances and consumer electronics (excluding mobile phones) in India, mainly in the offline channel. It holds leading position in India across product categories such as washing machines, refrigerators, panel TVs, inverter air conditioners, and microwaves. It is the market leader in the offline segment, which contributes ~77% of India’s home appliances and consumer electronics market. It sells products to B2C and B2B consumer in India and overseas. Also, it offers installation services, repairs and maintenance services for all products. It has key two segments, such as - i) Home Appliances and Air solutions, and ii) Home Entertainment.

Details of the Issue:

Total issue is of ~Rs. 11,607 Cr (at upper price band), a complete offer for sale from its parent company, LG Electronics Inc

Investment Rationale:

* Leading brand in India’s offline consumer electronics and appliances market, backed by strong brand equity and global technological expertise of LG Electronics Inc., Korea

* Strategic Investments and Growth Outlook

* Localized supply chain and automation-led manufacturing

* Extensive distribution and after-sales service network

* Market leader in multiple product categories with first-mover technological launches in India

Valuation and Recommendation:-

LG Electronics India Limited (LGEIL), a subsidiary of LG Electronics Inc., Korea, leads the Indian home appliance and consumer electronics market with strong brand equity and technological excellence. LG’s performance has been decent, with a topline growth of 10.8% CAGR and PAT growth of 28% CAGR between FY23 and FY25. During the same period, margins expanded by 320bps (FY25 EBITDA margin: 12.8%). LGEIL’s diverse product offerings, strong manufacturing capabilities and scale driven operating leverage have strengthened profitability profile. In FY25, it has reported ROE at 36.9% and ROCE at 46.8%, amongst best in the industry. It maintains a strong cash position backed by an efficient operating cycle.

With favorable macroeconomic trends, rising consumer demand, and continued product innovation, the company is well-positioned for sustainable long-term growth. At a valuation of 35.1x FY25 EPS, compared to the industry average of 55.7x, the issue appears attractively priced. Thus, we recommend a ‘SUBSCRIBE’ rating on the IPO.

Please refer disclaimer at https://www.nirmalbang.com/disclaimer.aspx
SEBI Registration number is INH00000176