Emkay Global Financial Maintains Buy Rating on LG Electronics India with a Target Price of Rs 1900

LG Electronics India Research Report

Key Highlights

• LG Electronics India plans to double its exports revenue in FY27 compared to FY25, with a potential >20% CAGR over the next 5 years, driven by a dedicated exports team, product localization, and capacity expansion in Sri City.
• Within the B2B segment, which accounts for approximately 10% of revenue, interactive displays (mainly the education segment) have seen higher growth this year, while data center chillers are expected to be a key growth driver in the future.
• The residential air conditioning (RAC) demand remains healthy, with 1 million units of inventory built up in preparation for the peak season (April-May). Regional volatility is expected, with strong demand in AP/TN and the West, but weak demand in Kerala and Karnataka.

Category Performance

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• Residential air conditioners (RACs) have seen a price increase of 18-19%, including the impact of BEE regulations.
• TVs have seen a price hike of 5% in March, with expectations of another 8-10% increase.
• Refrigerators (Ref) and washing machines (WM) have seen a price hike of 2-3% post-festive season.
• Industry growth in Ref and WM remains modest at 5-7%, but LG is outperforming due to premiumization.

Supply and Pricing Dynamics

• Supply remains benign due to global sourcing scale and early shift to Propane (PNG) to mitigate Liquefied Petroleum Gas (LPG) risk.
• LG Electronics India expects Q4 growth to be in the early double digits, with margins likely to improve compared to the previous year.

Recommendation

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• We retain our BUY recommendation for LG Electronics India with a target price of Rs1,900 (50x Dec-27E PER).