LG Electronics India premiumisation and exports drive Q1 FY27 margin expansion

Investment View and Valuation

Prabhudas Lilladher's August 16, 2026 Q1 FY27 result update retains a HOLD rating on LG Electronics India, after downgrading the stock from Accumulate. The broker raised its target price to Rs 1,723 from Rs 1,690, but cited the recent run-up in the share price as the reason for the rating downgrade.

The revised target price is based on 45 times FY28E EPS. PL estimates FY26-FY28E revenue, EBITDA and PAT CAGR of 12.7 per cent, 23.4 per cent and 23.1 per cent, respectively.

Q1 FY27 Financial Performance

LG Electronics India's Q1 FY27 consolidated revenue increased 15.5 per cent year-on-year to Rs 72.3 billion, exceeding PL's estimate by 2.7 per cent. Gross margin declined 20 basis points year-on-year to 31.4 per cent, marginally below the 31.6 per cent estimate.

Segment Performance

Home Appliances and Air Solution

The Home Appliances and Air Solution segment delivered revenue growth of 13.6 per cent year-on-year to Rs 55.8 billion in Q1 FY27, supported by double-digit growth across major categories. Air conditioners and refrigerators benefited from peak summer demand, while washing machines grew strongly before the seasonal peak.

Premium products led growth, and the Essential Series sold more than 0.5 million units during January-June 2026. Segment EBIT margin was 11.6 per cent, up 10 basis points year-on-year, aided by premiumisation-led realisation gains, operating leverage, calibrated pricing and localisation.

Home Entertainment

Home Entertainment revenue rose 22.3 per cent year-on-year to Rs 16.6 billion, driven by both TV volume and value growth as consumers upgraded to larger screens. TVs of 55 inches and above grew about 53 per cent and accounted for about 50 per cent of the TV segment.

LG Electronics India held 26 per cent TV market share and 59 per cent OLED market share. Information Display retained 36 per cent market share, around 5 percentage points ahead of the second-ranked player, helped by government and corporate orders.

Home Entertainment EBIT margin expanded 340 basis points to 19.1 per cent because of premiumisation, richer mix, higher realisations, normalised promotional spending and operating leverage.

Management Outlook and Capacity Expansion

Management guided for mid-teen revenue growth and an early double-digit EBITDA margin in FY27. Export revenue grew 30 per cent year-on-year in Q1 FY27, with products sold in more than 60 countries. PL notes that export margins are higher than domestic margins.

Management is targeting around 65 per cent localisation over the next three to four years, with annual improvement of 2-3 per cent.

Q1 FY27 capex was Rs 7.36 billion, including Rs 5.88 billion for Sri City. Sri City is expected to begin capitalisation in H2 FY27 through compressor and room air-conditioner production lines. The facility will add 2 million compressor capacity to the existing 1 million capacity at Noida.

Estimate Revisions

PL increased its FY27E and FY28E estimates as follows:

• Sales estimates increased by 1.4 per cent for FY27E and 1.8 per cent for FY28E.
• EBITDA estimates increased by 1.5 per cent for FY27E and 1.8 per cent for FY28E.
• EPS estimates increased by 1.6 per cent for FY27E and 1.9 per cent for FY28E.