LG Electronics gets new 'Buy' at JM Fin on fundamentals, market leadership
JM Financial initiated coverage on LG Electronics with a 'Buy' rating and a target price of ₹1,630, an upside potential of nearly 19 per cent from the Monday's close
 "LG Electronics gets new 'Buy' at JM Fin on fundamentals, market leadership")
JM Financial has initiated coverage on LG Electronics India Ltd., citing the company's market leadership, strong fundamentals and consistent return profile.
The brokerage initiated coverage with a 'Buy' rating and a target price of ₹1,630, an upside potential of nearly 19 per cent from the previous close.
Analysts at JM Financial highlighted the benefits of support from parent LG Group, including annual research and development spending of around $2 billion, which strengthens the firm's technology edge amid intense competition and fast-changing consumer preferences. Around 95 per cent of LG Electronics' products are manufactured in-house at its Noida and Pune facilities, providing supply-chain control and scale benefits.
The company has also announced a third manufacturing facility at Sri City in Andhra Pradesh with an investment of about ₹5,000 crore, expected to be operational by the financial year 2027 (FY27), further strengthening its domestic manufacturing footprint.
JM Financial noted that the company remains among India’s leading premium home appliances brands, retaining leadership in the offline channel across key categories such as refrigerators, air conditioners, washing machines and televisions, with market share exceeding 25 per cent excluding air conditioners. ALSO READ | LTIMindtree Q3 shows steady recovery; analysts see FY26 as transition year
The company’s dominance in premium products, in-house manufacturing and higher exposure to higher-margin segments such as business-to-business products, service contracts and exports has helped it sustain a margin profile superior to peers. JM Financial added that the launch of the LG Essential series to address mass-premium demand, along with favourable macro tailwinds, should support steady revenue and profit growth over the medium term.
The brokerage values the stock at 45 times December 2027 estimated earnings, backed by an earnings per share compound annual growth rate of 16 per cent and an average return on equity of 27 per cent over FY26-28 estimates.
Over FY18-25, LG Electronics delivered an average return on equity and return on capital employed of 33 per cent and 29 per cent, respectively, while consistently generating operating and free cash flows.
JM Financial said it does not assign a price-to-earnings discount to LG Electronics despite its relatively lower earnings growth versus peers, given its leadership across categories, industry-leading margins, strong parentage, manufacturing capabilities and robust fundamentals. ALSO READ | Hindustan Zinc hits 52-week high after strong Q3; analysts stay optimistic
LG Electronics share price history
The household appliances maker's stock fell as much as 1.21 per cent during the day to ₹1,354.3 per share. The stock pared losses to trade 1 per cent lower at ₹1,357 apiece, compared to a 0.27 per cent decline in Nifty 50 as of 9:25 AM.
Shares of the company fell for the fourth straight session, according to Bloomberg. The counter has fallen 10.7 per cent this year, compared to a 2.3 per cent decline in the benchmark Nifty 50. LG Electronics has a total market capitalisation of ₹92,089.05 crore.
==========
(Disclaimer: The views and 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.)