LG Electronics India premiumisation and exports support growth and margin expansion

Investment View and Valuation

In its August 17, 2026 result update, ICICI Direct Research, a division of ICICI Securities, retained its BUY rating on LG Electronics India Ltd. The broker views the company’s brand strength and South Korean parentage as core advantages that support domestic and export opportunities while helping manage commodity and currency volatility.

ICICI Direct values the stock at 50 times FY28E earnings per share and sets a target price of Rs 2,040 per share, compared with the report CMP of Rs 1,730.

Strong Q1FY27 Financial Performance

LG Electronics India reported strong Q1FY27 results despite raw-material cost pressure and currency headwinds. Revenue, EBITDA and adjusted PAT grew 15.5 per cent, 26.2 per cent and 27.2 per cent year on year, respectively. EBITDA margin improved by 107 basis points year on year to 12.5 per cent.

The sequential comparison from Q4FY26 showed revenue down 10 per cent, EBITDA down 4 per cent and PAT down 6 per cent. However, the sequential improvement in gross margin indicates, in ICICI Direct’s view, an ability to pass on costs.

Premiumisation Drives Segment Growth

Home Appliances and Air Solutions

The Home Appliances and Air Solutions segment delivered revenue growth of 13.6 per cent year on year to Rs 5,577 crore. French-door refrigerators, washing machines above 8 kg and dishwashers recorded strong growth. Segment EBIT was approximately Rs 640 crore, up about 13 per cent, while EBIT margin remained steady at 11.5 per cent.

Higher volumes, disciplined pricing and deeper localisation supported the segment’s performance.

Home Entertainment

Home Entertainment was the outperforming segment, with revenue up 22.3 per cent year on year to Rs 1,657 crore and EBIT up 48.5 per cent. EBIT margin expanded to 19 per cent, supported by large-screen TV, OLED, QNED and information-display demand, a richer product mix, normalised promotion costs and operating leverage.

Management said 55-inch-and-larger TVs grew about 53 per cent year on year and represented approximately 50 per cent of the TV business. LG Electronics India held about 26 per cent TV market share and about 59 per cent OLED market share.

Management expects the shift towards larger premium formats to be structural, supported by QNED, Micro RGB and OLED launches. The Essential Series sold more than 5 lakh units during January-June, targets first-time buyers in tier 2 and tier 3 cities, and is not margin dilutive versus the wider B2C portfolio. Essential products are exported to 22 countries.

Exports, Capacity Expansion and Localisation

Exports rose 30 per cent year on year in Q1FY27 under the Make India Global strategy and reached more than 60 countries. Export margins are relatively better, providing an additional support to profitability.

The Rs 5,000 crore Sri City expansion is on track. Compressor production is expected to begin from Q3FY27 and room air-conditioner production from Q4FY27. The expansion is expected to almost double manufacturing capacity, improve supply-chain efficiency and enhance exports. It will be funded through internal accruals without external debt.

Localisation stood at 55.2 per cent in FY26, and management targets approximately 65 per cent over the next three to four years, implying an improvement of 2-3 per cent annually. ICICI Direct views localisation as a structural margin lever that can reduce import dependence and currency volatility.

Additional Growth Opportunities

• HVAC, information-display panels and commercial air conditioning offer additional growth avenues.
• LED signage achieved its highest-ever quarterly sales and a 36 per cent market share.
• Management expects B2B revenue to sustain a 20 per cent CAGR, in line with FY22-FY25.
• Data-centre cooling is a longer-term B2B opportunity, although management does not expect it to be material in FY27.

ICICI Direct Financial Forecasts

Key Risks

• Intensifying competition.
• Higher raw-material prices.
• Dependence on the parent entity for research and development.