Motilal Oswal sees 58% upside in LG Electronics India; check 5 key reasons

Domestic brokerage Motilal Oswal Financial Services has initiated coverage on LG Electronics India Ltd (LGEIL) stock with a ‘Buy’ rating and set a target price of ₹1,800, implying an upside potential of 58 per cent from its issue price of ₹1,140. 

 

The brokerage sees strong growth potential for the company, driven by premiumisation, localisation, and expansion in exports and the B2B segment. 

 

LG Electronics India is set to debut on the bourses today, with the grey market premium (GMP) indicating a listing price of around ₹1,570, translating to a 37.7 per cent gain over the issue price.

 

Motilal Oswal said LG Electronics India is well placed to benefit from India’s booming consumer electronics market, backed by strong fundamentals, leadership in key categories, and a growing focus on innovation and domestic manufacturing. 

 

 

The brokerage highlighted five key reasons for its bullish stance on LG Electronics India stock:

Leadership in a high-growth industry

 

According to Motilal Oswal analysts, India’s home appliances and consumer electronics market (excluding mobile phones) is projected to grow at a compound annual growth rate (CAGR) of 14 per cent during CY24-29. With dominant market shares across key product categories, such as OLED TVs, washing machines, and refrigerators, LG Electronics India is poised to capitalise on this expansion. The company aims to strike a balance between premium and mass-market products, aligning with its global strategy of “premiumising” mass offerings to boost affordability and widen its consumer base.

Rising export share and B2B growth

 

LG Electronics India plans to increase its export contribution to around 10 per cent by FY28 from 6 per cent in FY25, alongside a higher focus on the B2B segment, which offers superior margins. The company expects the B2B business to contribute 14-15 per cent of revenue over the next few years, compared to 10 per cent currently. Additionally, the company is targeting a 25 per cent annual growth in its Annual Maintenance Contract (AMC) revenue stream.  ALSO READ | Tata Capital debuts flat on D-street; should you buy, sell or hold?

Premiumisation, localisation boosting profitability

 

The company’s push toward premium products, including OLED TVs, inverter ACs, and advanced smart appliances, has strengthened its presence in high-margin segments, analysts noted. LG Electronics India also aims to raise the share of domestically sourced raw materials from 54 per cent in FY25 to 63 per cent over the next four years, supporting margin expansion and supply chain efficiency.

Strong distribution and brand-building network

 

LG Electronics India’s extensive network of 35,640 retail touchpoints, 777 exclusive brand shops, and 463 B2B partners, along with 1,006 service centres, underpins its strong market presence. The company consistently invests around 4.5 per cent of its revenue in advertising and promotions, reinforcing its brand equity and consumer trust.  ALSO READ | Is Adani Ports the next big winner? Investec decodes; check target price

Robust financial metrics and execution strength

 

Analysts at Motilal Oswal expect LG Electronics India to deliver strong returns, with return on equity (RoE) and Return on Invested Capital (RoIC) projected at 30 per cent and 66 per cent, respectively, by FY28. The company also boasts healthy operating cash flow conversion of 74 per cent for FY26-28, supported by operational efficiency and margin gains from localisation and high-value segments.

 

The brokerage believes LG Electronics India’s leadership, profitability drivers, and strategic initiatives justify higher valuations and thus initiated coverage with a ‘Buy’ rating and ₹1,800 target price, based on 40x FY28E earnings per share (EPS).

 

However, Motilal Oswal cautioned that potential risks include an increase in royalty payments to parent LG Electronics Korea, volatility in raw material prices, and rising competition in the consumer electronics space.