HDFC Sec starts coverage on LG Electronics India with 'Add'; check target

HDFC Securities expects the LG Electronics India's revenue, Ebitda, and adjusted PAT to grow at 8 per cent CAGR each over FY25-28E

LG Electronics India share price: Domestic brokerage HDFC Securities has initiated coverage on LG Electronics India, a home appliances and consumer electronics company, with 'Add' rating, citing the company's market leadership in core product categories, strong brand equity, consistent technological innovations and product launches, healthy balance sheet, robust return ratios, and low working capital needs. 

 

According to the brokerage, the company leverages the LG Group’s ecosystem across R&D, manufacturing, and automation to improve efficiency and drive innovation through first-in-industry products.

 

HDFC Securities expects the company's revenue, Ebitda, and adjusted profit after tax (APAT) to grow at 8 per cent CAGR each over FY25–28E. It has set a target price of ₹1,545 per share, based on 38x Mar-28E adjusted earnings per share (AEPS). The target price implies an upside potential of over 9 per cent from the January 29, 2026, closing price of ₹1,413.50 on the NSE.  ALSO READ | Nifty showing signs of potential bullish reversal, say market experts

Here's why HDFC Securities is upbeat on LG Electronics India:

Strong brand, leadership across categories: HDFC Securities said, LG commands leading offline market shares in key segments - washing machines (34 per cent), refrigerators (30 per cent), panel TVs (28 per cent) and inverter ACs (21 per cent) as of June 2025. The brokerage noted that revenue is well diversified, with refrigerators (27 per cent), air conditioners (22 per cent), washing machines (21 per cent) and televisions (20 per cent) forming the bulk, while other products contribute the remaining 10 per cent.

 

Innovation-led growth with parent backing: According to analysts at HDFC Securities, the company benefits from the LG Group’s R&D, manufacturing and automation capabilities, aiding efficiency and first-in-industry innovation, while its diversified product portfolio across price points helps address a broad customer base.  ALSO READ | Dabur India sees modest profit growth in Q3, but Street remains cautious  

Strong growth, margins to moderate with capex: LG Electronics India delivered a healthy revenue CAGR of 13 per cent over FY23–25, while Ebitda and APAT grew at a faster 22 per cent CAGR. Ebitda margins expanded by 260 basis points to 12.8 per cent during FY22–25, on the back of higher localisation and premiumisation. The brokerage highlighted strong return metrics, with Return on Equity (RoE) rising sharply from 20 per cent in FY22 to 45 per cent in FY25. However, it also cautioned that the planned ₹50 billion capex at Sri City (to be commissioned in phases by CY30) could dilute return ratios going ahead.

 

Margin recovery expected from FY27E: Analysts expect healthy growth across all segments, though FY26E is likely to remain soft due to muted demand. Margins are projected to decline in FY26E on account of weak demand, higher promotional spends, rising raw material costs, and negative operating leverage, but are expected to recover from FY27E with demand revival.  Disclaimer: The views or investment tips expressed by the brokerage in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.