LG Electronics India Research Report

Key Takeaways

LG Electronics India (LGE) visited by Emkay Global Financial research team, highlighting key insights from management and plant visit in Pune.
Production Disruption: LGE does not foresee production disruptions from current LPG supply issues, with limited dependence on refrigerators and RACs covered until March 26, and transition to PNG/diesel underway.
Vendor Challenges: However, vendors are facing supply challenges, which may impact LGE's operations.
Channel Inventory: RAC channel inventory has normalized following a weak prior season and de-stocking in Q3.
Demand Sensitivity: RAC demand is sensitive to temperature trends, with 10-15 days of peak summer able to absorb up to 3 million units of channel inventory.

Financial Projections

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FY26 Growth: LGE expects muted growth in FY26, but exits the year with strong momentum via inventory build-up, expecting double-digit margins.
Premiumization: LGE is structurally gaining share via premiumization, with a premium mix of 29% compared to the industry's 15-16%.
Price Hikes: LGE took 7-9% price hike in RACs in January 2026 and 2% in appliances post Diwali.

Mass Segment: LGE's expansion into the mass segment via the Essential range is not expected to be margin-dilutive due to cost engineering, calibrated outsourcing, and premium mix leadership.
Export Growth: LGE plans to scale exports by 2x in FY27, including shipments to the US and expanding in developing markets, which currently account for 6% of revenue.

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BUY Rating: Emkay Global Financial retains a BUY rating for LGE, led by sustained domestic market-share gains, expectations of a better summer with normalized channel inventory, and gradual export traction in FY27, with the Sri City plant ramping up over FY27-29.
Target Price: The target price for LGE is set at Rs1,900.