LG Electronics newly rated 'Buy' at Axis Direct; 16% upside potential seen

Axis Direct believes LG Electronics is well-positioned for sustained profitability and growth supported by its leading market share, brand equity, and deep distribution networks

Axis Direct has initiated coverage on LG Electronics India with ‘Buy’ for a target of ₹1,815 per share. The target price implies 16.6 per cent upside from current levels. The brokerage believes LG Electronics is well-positioned for sustained profitability and growth supported by its leading market share, brand equity, and deep distribution networks.

 

The brokerage expects Revenue/Earnings before interest, tax, dpereciation and amortisation (Ebitda)/profit after tax (PAT) compound annual growth rate (CAGR) of 9 per cent/19 per cent/14 per cent over FY26–FY28E. Valuing the company at 44x FY28E earnigs per share (EPS).

 

At 10:52 AM, LG Electronics' share price was trading 0.32 per cent lower at ₹1556.1 per share. In comparison, the BSE Sensex was down 0.35 per cent at 83,442.4. 

 

Market leadership with scope to deepen premium mix

The brokerage said LG Electronics has maintained high market shares across key categories and continues to gain share in premium segments, including leadership in side-by-side refrigerators. It expects deeper penetration of consumer durables in tier 2/3 cities to support category growth, where LG’s distribution reach could further strengthen its position. The note also highlighted potential market-share gains through the planned entry into LG Essentials (an entry-level brand), capacity enhancements, and supply-chain strengthening, which could aid profitability over time. 

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Innovation tailored for Indian consumers

The report highlighted LG’s track record of consumer-centric innovation over nearly three decades in India, leveraging global technology strengths while tailoring products to local needs. It cited early launches of OLED, 4K and Smart TVs, where the company is said to hold a dominant share, along with energy-efficient inverter air conditioners, climate-suited washer–dryer solutions, and microwave ovens aligned with Indian cooking habits. A nationwide after-sales service network and localised design features were flagged as key pillars supporting brand loyalty.

Localisation and backward integration seen driving efficiencies

The brokerage expects operational efficiencies to remain a key differentiator, driven by a localised supply chain. LG electronics works with 287 long-standing suppliers, and local procurement rose to 54 per cent in FY25, which the note said helps lower costs, mitigate currency risk, and reduce lead times. The upcoming Sri City plant is expected to improve localisation and logistics efficiency further. The report also pointed to the company’s ₹705 crore incentive under a government manufacturing scheme as an indicator of participation in expansion-linked initiatives.

Integrated model supports profitability; exports, B2B seen as growth levers

The brokerage said LG operates a fully integrated model spanning manufacturing, product development, and distribution, enabling cost control, scale benefits, and margin stability. It cited return on capital employed (RoCE) of 41 per cent in FY25 as evidence of capital efficiency and strong returns. Growth drivers flagged include expansion into B2B segments, plans to double exports by FY27, entry into new product categories and rising localisation under ‘Make in India’.

 

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