Why is the market cap of LG Electronics India Ltd 1.44 times bigger than its South Korean Parent?

In a remarkable display of market dynamics, LG Electronics India has achieved a market capitalisation significantly greater than its South Korean parent, LG Electronics Inc. (LG Corp), following its blockbuster Initial Public Offering (IPO) in October 2025. This valuation anomaly underscores the stark differences in investor sentiment, structural profitability, and growth potential between the booming Indian market and the mature global one.

The Numbers: India's Premium Valuation

Despite contributing only a fraction of the parent company's global revenue, LG Electronics India achieved a market capitalisation of approximately Rs 1.15 lakh crore (USD 13 billion). This figure notably exceeded the parent's market cap of about Rs 80,000 crore (USD 10 billion), making the Indian subsidiary's valuation approximately 1.44 times that of LG Corp.

This premium is further highlighted by the disparate profitability metrics:

• Net Profit Margin: LG India boasts a strong net margin of about 7 per cent, a razor-thin figure compared to LG Inc.'s net profit margin of under 1 per cent (net income ₩591 billion on ₩87.7 trillion sales in 2024).
• Revenue vs. Profit: The parent's global revenues (approximately Rs 82,500 crore in 2024) are over 3 times the Indian unit's, yet LG India's one-year net profit (around Rs 1,710 crore in FY24) is not far below the parent's net profit (approximately Rs 3,800–4,000 crore in 2024). This signifies LG India's dramatically higher profit yield on sales.
• Earnings Multiple: The market assigns LG India a P/E ratio of approximately 50x, significantly higher than LG Inc.'s P/E of around 15x.

Structural Advantage: Focus vs. Conglomerate Drag

The divergence is rooted in the structural differences between the two entities:

1. Market Focus & Growth: LG India's lean model is focused on fast-selling consumer appliances (refrigerators, ACs, TVs) in India, one of the world's fastest-growing consumer markets. India's home appliance market (excluding mobile phones) is forecast to grow at roughly 14 per cent CAGR from 2024 to 2029, with categories like ACs and dishwashers still having single-digit or teen penetration. LG India projects a 10 per cent yearly revenue CAGR through FY2028.
2. Parents' Diversified Struggle: LG Electronics Inc. is a sprawling global enterprise with a diverse mix, including home appliances, TVs, automotive components, and B2B solutions. Its top-line growth has been essentially flat, with global sales growing only about 6.6 per cent from ₩82.3 trillion (2023) to ₩87.7 trillion (2024). New ventures like automotive electronics, while strategic, have yet to turn a profit and drag down consolidated margins. The parent grapples with fierce competition and commoditization in mature global markets.
3. Local Tailwinds: LG India benefits from local manufacturing incentives, import protections (tariffs on finished electronics), and recent government policy tailwinds like GST Tax cuts on consumer durables, all of which support its superior margins. The company pays a modest royalty (about 2 per cent of sales) to the parent, allowing it to retain the bulk of its operating profit.

Investor Sentiment: The India Premium

Investor sentiment is another critical factor. LG India's IPO was overwhelmingly positive, with an oversubscription rate of 54 times and institutional bids reaching a staggering 166x the allotted shares. This frenzy, attracting nearly USD 50 billion in bid value for a USD 1.3 billion issue, reflects the immense appetite for Indian growth stories, supported by the economy's approximately 6 per cent annual growth.

Conversely, LG Inc. is viewed in South Korea's mature market (with modest GDP growth of 2–3 per cent) as a stable, dividend-paying value stock. This valuation disparity is common: an analysis of 11 MNC subsidiaries listed in India found their Price-to-Earnings (P/E) ratios to be 2x to 6x higher than their parent firms, showcasing the "scarcity premium" investors pay for dominant consumer businesses in India.

Strategic Autonomy and Future Growth

The IPO, while maintaining the parent's ownership at around 85 per cent, gives the Indian subsidiary greater autonomy and public visibility. LG India is prioritising localisation and premiumization, and is actively expanding its manufacturing footprint, including a new Rs 5,000 crore (USD 600 million) plant in Andhra Pradesh. This new facility will not only cater to rising domestic demand but also position India as a potential export hub for the global LG group, further cementing LG India's importance and growth narrative.

Disclaimer: The article is for informational purposes only and not investment advice.