LG Electronics India targets margin expansion through Sri City, exports and B2B growth

Investment View and Recommendation

In its August 26, 2026 report, Ventura Securities recommends BUY on LG Electronics India Limited. The recommendation is supported by the company’s category leadership, premiumisation, localisation, capacity expansion and an expanding mix of exports and B2B businesses.

LG Electronics India is a leading consumer electronics and home-appliances company, with leadership positions in refrigerators, washing machines, televisions, inverter air conditioners and microwaves. Ventura identifies LG Electronics India as its top-ranked consumer-durables company ahead of Amber Enterprises, Havells India and Dixon Technologies.

FY26 Financial Performance

FY26 EBITDA margin moderated because of supply-chain issues, tariff pressure, inflation and a weak summer, which affected air-conditioner demand. Ventura nevertheless considers LG’s operating margin superior to most consumer-durables and electronics peers. It attributes this resilience to brand strength, a premium product mix, scale, local manufacturing and control over compressor components.

Growth Outlook and Financial Forecasts

Ventura expects revenue, EBITDA and PAT to compound at 13.3 per cent, 22.8 per cent and 21.5 per cent respectively between FY26 and FY29E. Its FY29E forecasts are revenue of Rs 35,758 crore, EBITDA of Rs 4,457 crore and PAT of Rs 3,018 crore.

Forecast segment growth is led by room air conditioners at a 16.1 per cent FY26-FY29E CAGR, followed by home entertainment at 13.5 per cent, washing machines at 13.4 per cent, refrigerators at 11.1 per cent and other sales at 9.0 per cent. The estimates assume premiumisation, LG Essential products, market-share gains and deeper Tier 2 and Tier 3 distribution.

Sri City Capacity Expansion and Localisation

A key catalyst is the planned Rs 5,000 crore Sri City plant in Andhra Pradesh. The project is intended to expand compressor capacity from 1 million to 3 million units and nearly double room-air-conditioner capacity. As of March 2026, Rs 657 crore had been invested in the plant.

Ventura expects the investment to improve localisation from about 55 per cent in FY26 towards 65 per cent by FY30E. This should reduce import dependence, foreign-exchange and logistics exposure while supporting margins.

Exports, B2B and Commercial Opportunities

Ventura expects exports to rise from about 6 per cent of revenue to 9-10 per cent and B2B revenue to expand from about 4 per cent to 7-8 per cent over the medium term.

Commercial HVAC, VRF systems, chillers, displays, annual maintenance contracts and data-centre cooling are identified as higher-margin opportunities. Ventura’s estimates exclude data-centre cooling, making material order wins a potential upside factor.

Balance Sheet and Cash Generation

LG Electronics India has a zero-debt balance sheet, FY26 cash and cash equivalents of Rs 4,476 crore, and a broad distribution and service network. Ventura expects strong internal cash generation to fund expansion, although elevated capex may suppress free cash flow in FY27E before recovery.

Valuation and Price Targets

Ventura values LG Electronics India using a DCF methodology with a 10.2 per cent WACC. It sets a FY29 target price of Rs 2,141, equivalent to 48.2 times FY29 earnings and implying 26.8 per cent upside over 24 months.

Principal Risks

• Commodity-cost and currency volatility.
• Competitive pricing and marketing intensity.
• Weak or weather-affected consumer demand.
• Higher working-capital intensity.
• Execution, ramp-up and utilisation risks at the Sri City plant.