While brokerages have increased their earnings estimates, the recent rally has turned some brokerages cautious on the returns potential. At the current price, the stock is trading at 44-45x its 2027-28 (FY28) earnings estimates.
The strong showing by LG in the quarter was driven by an acceleration in top-line growth to 15 per cent year-on-year (Y-o-Y), from 8 per cent Y-o-Y in the fourth quarter (January-March/Q4) of 2025-26 (FY26). Overall operating profit margin also expanded by 110 basis points (bps) Y-o-Y to 12.5 per cent and was ahead of estimates.
The revenue gains were driven by robust growth across its segments, with the home entertainment business leading with a spurt of 22 per cent Y-o-Y. There was both volume and value growth in televisions (TVs) as consumers upgraded to larger screens. For the second consecutive quarter, the TV business grew 25 per cent Y-o-Y. TVs with screen sizes of over 55 inches grew 53 per cent and now contribute 50 per cent of the TV segment.
The company’s TV market share is at 26 per cent, usually hovering in the 25-27 per cent range, while its organic light-emitting diode market share remained stable at 59 per cent. The company is also leading the information display segment with a 36 per cent share, aided by orders from government and corporate customers. Thanks to the growth, margins in the home entertainment segment expanded 340 bps Y-o-Y to 19.1 per cent, driven by premiumisation, a richer mix, higher realisations, normalised promotional spending, and operating leverage. On a sequential basis, the gains were sharper at 566 bps.
The home appliance and air solution segment also posted a strong performance, registering growth of 13.6 per cent Y-o-Y, with every major category delivering double-digit growth. Air conditioners (ACs) and refrigerators benefited from peak summer demand, while washing machines saw strong growth ahead of the seasonal peak. The Essential Series, which comprises mass-market, Made-in-India home appliances, saw sales volume of 500,000 units in the first half of calendar 2026. Margins in the segment were flat at 11.6 per cent and were aided by a premium product-led uptick in realisations, operating leverage, calibrated pricing, and localisation.
While the current localisation is about 55 per cent, the company is eyeing an improvement of 2-3 percentage points every year and seeks to raise local manufacturing to 65 per cent over the next three to four years. The company’s backward-integration initiatives could get a boost from the Indian government’s decision in May this year to impose quantitative restrictions on compressor imports. The restrictions cap imports at 60 per cent of 2024-25 levels for reciprocating compressors used in refrigerators and at 70 per cent for rotary compressors used in ACs.
Motilal Oswal Research points out that the company has a well-diversified product portfolio across multiple categories, enabling it to deliver growth across different demand cycles. Analysts led by Sanjeev Kumar Singh of the brokerage remain positive on its long-term growth prospects, supported by broad-based category growth, premiumisation, rising localisation, strong brand positioning, and increasing contributions from exports and business-to-business businesses. The brokerage has raised its earnings estimates by 7-10 per cent for FY27 and FY28 on higher revenue and margin assumptions. It has a ‘buy’ rating with a target price of ₹2,000.
While Prabhudas Lilladher Research is also positive on the company’s financials and expects its revenues, operating profit, and net profit to rise 23 per cent over FY26-FY28, it has downgraded the stock to ‘hold’ from ‘accumulate’. This is on account of the recent run-up in the stock price. The brokerage has revised its target price from ₹1,690 to ₹1,723, based on 45x its FY28 earnings.
 "LG Electronics")