LG Electronics: Nomura's top durables bet on FY27 recovery, export push

LG Electronics is positioned to benefit from a recovery in consumption demand, a normal summer season (with around 50 per cent exposure to summer-led products), and export tailwinds, said Nomura

LG Electronics remains Nomura’s preferred pick in the consumer durables space, after meeting the company’s management. The brokerage has maintained a ‘Buy’ on LG Electronics stock with a target of ₹1,836. It noted that the company is sharpening its focus on reaccelerating growth and gaining market share, with management indicating that early signs of recovery in Q4FY26 have been encouraging and momentum is expected to strengthen further in FY27E.  

Additionally, according to Nomura, LG Electronics is positioned to benefit from a recovery in consumption demand, a normal summer season (with around 50 per cent exposure to summer-led products), and export tailwinds. It expects revenue growth of 14 per cent/12 per cent in FY27/28F, a strong 31 per cent earnings per share (EPS) compound annual growth rate (CAGR) over FY26–28F, and Earnings before interest, tax, depreciation and amortisation (Ebitda) margin expansion from 10.4 per cent in FY26F to 12.8 [per cent/14.1 per cent in FY27/28F. 

The company is also working across multiple levers—product mix, new categories, exports, and adjacencies such as AMC and B2B—to improve its growth outlook, which is another key positive.

Premium products doing well; affordable push to widen reach

LG Electronics said recent launches in premium categories—such as French-door refrigerators and artificial intelligence (AI)-enabled washing machines—are seeing strong traction. At the same time, it is broadening its playbook in mass and value segments by adding categories like chest freezers and fixed-speed air conditioners, and stepping up its push in affordable offerings under the “Essential” brand across ACs, washing machines and refrigerators.  READ | AI fears overdone? Emkay turns 'Overweight' on IT, adds Infosys, HCL Tech 

Exports seen as structural driver; target to double in FY27 Management reiterated that exports will remain a key structural growth driver. The company has set a target to double exports in FY27E, which could contribute around 6 per cent incremental growth, and expects the export share to rise further, aided by a stronger push into the US market. The company plans to begin with premium refrigerators and expand the export portfolio over time.

AMC and B2B gaining traction

LGEL noted that annual maintenance contracts (AMC)—currently about 2 per cent of revenue—and the B2B segment—around 10 per cent of revenue—have started improving and are expected to post strong growth in FY27E. Management sees these segments as increasingly important, supported by established products, brand strength, and relationships with large customers.

Post-IPO reorganisation 

The company has undergone an internal reorganisation following its initial public offer (IPO) and has hired multiple senior leaders to scale focus areas such as exports and AMC, management said.  READ | HDFC Sec trims target price on Mphasis, stays cautious amid AI disruption

Margins: Price hikes, localisation, and leverage to support recovery

On profitability, LG Electronics said it has already taken price hikes of up to 2 per cent in washing machines and refrigerators (October) and 7–10 per cent in air conditioners, which, along with operating leverage and higher localisation, should aid margin recovery.  

The company expects its affordability push not to be margin-dilutive, aided by a balanced go-to-market strategy across Tier-2/3 cities, general trade, and own-brand outlets. With an improved mix, management believes it can return to FY25E margin levels, with scope for further improvement. 

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