Investing in LG Electronics IPO? Don't miss these risks, strengths from RHP

LG Electronics India, the Indian arm of South Korean consumer durables major LG Electronics, is set to hit the primary markets with its highly anticipated initial public offering (IPO) on Tuesday, October 7. The ₹11,607.01-crore issue will be entirely an offer for sale (OFS), with promoter LG Electronics Inc. looking to offload up to 101.8 million equity shares.

 

The public issue, offered at a price band of ₹1,080–₹1,140 per share with a lot size of 13 shares, will remain open for subscription until October 9.

 

Meanwhile, early signals from the grey market suggest strong demand ahead of the IPO launch. According to sources tracking the unofficial market, unlisted shares of LG Electronics India are trading at around ₹1,390 apiece—reflecting a grey market premium (GMP) of ₹250, or approximately 21.93 per cent over the upper end of the price band.

 

 

As investor interest builds, here are some of the key strengths and risks highlighted in the company’s Red Herring Prospectus (RHP) that prospective investors should be aware of before applying for the IPO:

Top risks of LG Electronics India

Dependence on LG Electronics, royalty obligations

LG Electronics India is reliant on its promoter, LG Electronics, for various business functions and pays royalties for the use of intellectual property. Any deterioration in this relationship could negatively impact the company’s operations and financial performance. As per the RHP, the company has a contingent liability of ₹3,153 million related to royalty payments, which may also be subject to scrutiny by South Korean tax authorities in future periods.

Massive outstanding tax claims

The company is facing tax claims amounting to ₹4,717.05 crore, representing approximately 73.16 per cent of its net worth as of June 30, 2025. Unfavourable outcomes could materially affect its financial condition and operational stability.

 

“We cannot assure you that these claims will be decided in our favour and that no further liability will arise out of these claims or would not have a material adverse effect on the business, financial condition and results of operation of our Company,” the  company said in its RHP.

High revenue concentration in key product categories

For the three months ended June 30, 2025, 78.37 per cent of the company’s revenue came from its Home Appliances and Air Solution division. Sales of refrigerators, washing machines, air conditioners, and televisions together contribute the majority of this revenue. Any decline in demand for these core categories could significantly impact financial performance.

Supplier concentration, supply chain risks

The company’s top 10 suppliers contributed 32.25 per cent of raw material purchases during the quarter ended June 30, 2025. With key materials sourced internationally, any disruption due to geopolitical tensions, supply shortages, or supplier issues could adversely affect business operations.

Termination risk of framework agreement with LG Group

LG Electronics India operates under a Framework Agreement with LG Electronics and other LG Group companies for the provision of specific services and deliverables. This agreement is terminable with a 30-day notice by either party. Termination could disrupt ongoing operations and affect long-term business prospects.

Top strengths of LG Electronics India

Market leadership in home appliances and consumer electronics

According to the RHP, LG Electronics India holds a leading market share in the home appliances and consumer electronics industry in India. The company was the top player in this industry for the six months ended June 30, 2025, as well as calendar years 2024, 2023, and 2022, based on market share (in terms of value) in the offline channel, according to the Redseer Report. LG Electronics India is also a market leader in multiple product categories including washing machines, refrigerators, panel televisions, inverter air conditioners, and microwaves. 

Innovation driven by local consumer needs

LG Electronics India, in its RHP, has outlined that it has consistently introduced innovative technologies tailored to the Indian market. The company was the first among leading home appliances and consumer electronics players to introduce OLED televisions in India in 2015 and was also among the first to launch 4K televisions and smart televisions in 2011, as per the Redseer Report.

Extensive pan-India distribution, after-sales service network

As of June 30, 2025, LG Electronics India operates the largest distribution network among leading home appliances and consumer electronics players in the country, according to the Redseer Report. The company’s sales network includes 35,640 B2C touchpoints, comprising LG BrandShops strategically located in key shopping areas, modern trade stores such as Reliance Retail, Croma (Infiniti Retail), and Vijay Sales, as well as online platforms, traditional stores, distributors, and sub-dealers.

Strong manufacturing capabilities, localised supply chain

LG Electronics India has one of the largest in-house production capacities (excluding mobile phones) among its peers as of June 30, 2025, according to the Redseer Report. The company operates two manufacturing units in Noida and Pune, which together accounted for 85.51 per cent, 84.18 per cent, 86.05 per cent, 85.73 per cent, and 85.28 per cent of total sales for the three months ended June 30, 2025 and 2024, and for Fiscals 2025, 2024, and 2023, respectively. The company also has a strong supplier network consisting of 287 suppliers, with whom it has maintained relationships for an average of 13.13 years as of June 30, 2025.

 

Strong parentage, brand equity

LG Electronics India benefits from the strong backing of LG Electronics, the leading single-brand global home appliances player by revenue market share in CY2024. The strength of the globally recognised LG brand further reinforces consumer trust and market positioning.