LG Electronics India continues to outperform the broader consumer durables industry through consistent market share gains, premium product expansion, and strategic portfolio diversification. Despite mixed demand trends across key appliance categories, the company has delivered superior growth across refrigerators, televisions, and room air conditioners. Motilal Oswal believes the company’s premiumization strategy, expansion into underpenetrated product segments, and strengthened distribution network position it well for long-term growth. The brokerage expects revenue, EBITDA, and profit to grow at a healthy pace through FY26–FY28, supported by pricing actions, localization initiatives, and adjacencies such as B2B and exports. Based on these factors, the brokerage maintains a positive outlook on the stock.

Motilal Oswal Reaffirms BUY Call with Rs. 1,860 Target

Motilal Oswal Financial Services has reiterated a BUY rating on LG Electronics India (LGEIL), setting a target price of Rs. 1,860, implying approximately 17% upside from the current market price of Rs. 1,592.

The brokerage believes the company is well positioned to capitalize on demand recovery in India’s consumer durables sector. According to its projections, the company is expected to deliver a strong growth trajectory across revenue, profitability, and operating margins over the next three fiscal years.

Motilal Oswal estimates that LG Electronics India will generate revenue, EBITDA, and profit after tax (PAT) compound annual growth rates (CAGR) of roughly 10%, 22%, and 23%, respectively, between FY26 and FY28.

The brokerage values the company at 45x FY28 estimated earnings, reflecting its strong brand equity, premium positioning, and expanding addressable market.

Market Share Gains Continue Despite Industry Volatility

LG Electronics India has consistently outperformed industry growth trends across multiple key appliance categories.

Despite a challenging demand environment in certain segments, the company has continued to expand its market share through product innovation, strong distribution reach, and premium product offerings.

Key highlights from the company’s category performance include:

Refrigerators: While the overall refrigerator market declined by roughly 1.5–2%, LG managed to post marginal growth.

Televisions: The company recorded 6.4% growth, significantly higher than the industry growth rate of 3.8%.

Room Air Conditioners (RAC): Industry volumes declined by approximately 6%, but LG saw a smaller drop of around 4%.

In the television segment, LG’s market share reached 27.4%, reducing the gap with Samsung Electronics to just 4.3 percentage points.

Meanwhile, in refrigerators, the company continues to dominate the premium category, holding around 43% share in the side-by-side refrigerator segment.

These performance metrics underline the company’s ability to outperform even in a subdued demand environment.

Premiumization Strategy Driving Growth

LG Electronics India’s premiumization strategy remains the primary growth engine for the company.

The company has expanded its product portfolio across multiple appliance segments to capture higher-value consumers and widen its addressable market.

Recent portfolio expansions include:

Five-star two-ton air conditioners

Sub-one-ton AC models targeting compact spaces

Entry into fixed-speed air conditioners

Expanded bottom-freezer refrigerator lineup

Launch of French-door refrigerator models

These initiatives allow the company to participate across a wider spectrum of price and capacity segments.

The Essential Series, targeted at first-time buyers and underserved markets, has also gained traction across refrigerators, washing machines, and air conditioners.

For example:

Refrigerator models under this series are being expanded from four to eleven variants.

New 10-kg washing machines have been introduced.

Affordable 0.9-ton inverter ACs are targeting emerging demand segments.

This diversification significantly broadens LG’s market participation across both premium and value categories.

Distribution Strength Remains a Key Competitive Advantage

LG Electronics India’s extensive distribution network continues to provide a structural advantage in the consumer durables market.

The company operates through a highly scalable channel ecosystem, which includes:

Over 36,000 retail touchpoints

More than 800 franchise-owned stores

Approximately 500 distributors

Each distributor typically services between 100 and 500 sub-dealers, enabling deep penetration across Tier-2 and Tier-3 cities.

Dealer preference for LG remains strong due to its higher product sell-through rates and relatively stable pricing strategy. This ensures prominent shelf visibility and consistent demand.

From a manufacturing standpoint:

Premium products such as televisions, washing machines, and side-by-side refrigerators are produced at the Pune facility.

Mass-market products are manufactured at the Noida plant.

This manufacturing segmentation allows LG to optimize production efficiency and cost structures.

Price Hikes and Cost Control to Boost Margins

LG Electronics India has implemented calibrated price increases across categories to offset rising input costs.

Price adjustments introduced from October 2025 include:

Around 9% price hike for 5-star air conditioners

Around 7% increase for 3-star ACs

Approximately 2% increase for refrigerators and washing machines

These increases were necessary due to several external pressures:

Higher input material costs

Rupee depreciation

Changes in scrap procurement pricing mandated by regulators

New energy efficiency standards

Despite near-term margin pressure, management expects profitability to improve structurally due to premium product mix and cost optimization initiatives.

Currently, premium products contribute roughly 28% of LG’s revenue, compared with industry levels of around 16–17%.

This gap provides significant scope for further margin expansion.

Localization and Manufacturing Expansion Strengthen Cost Structure

Localization initiatives are gradually improving LG Electronics India’s cost efficiency and supply chain resilience.

Domestic sourcing has increased significantly over the past three years.

Earlier localization level: 45–46%

Current level: 57–58%

Medium-term target: around 65%

Key components now increasingly produced locally include:

Compressors

Printed circuit boards (PCBs)

Heat exchangers

Additionally, panel sourcing from TCL within India has increased from zero in FY22 to about 30% currently, with a long-term target of 50% localization.

The company is also expanding compressor manufacturing capacity.

Currently:

Annual compressor requirement: 1.8 million units

In-house production: 0.9 million units

A new compressor manufacturing facility under Phase-2 of the Sri City expansion is expected by March 2027.

Adjacency Businesses and Exports Add New Growth Engines

LG Electronics India is also scaling adjacent revenue streams beyond traditional consumer appliances.

These include:

Annual Maintenance Contracts (AMC)

Business-to-Business (B2B) solutions

Export markets

AMC revenue is expected to grow rapidly:

Around USD 40 million in CY24

Around USD 60 million in CY25

Target of USD 100 million by CY26

The B2B segment currently contributes roughly 10% of revenue and includes:

VRF systems

HVAC solutions

Data-center cooling

Cassette air conditioners

Chillers

Interactive displays

Exports also represent an important growth avenue. The company now exports appliances to over 50 neighboring countries and has begun producing side-by-side refrigerators that meet US specifications.

Financial Outlook and Valuation Snapshot

Financial Metric	FY26E	FY27E	FY28E
Revenue (Rs. billion)	247.3	272.3	300.5
EBITDA (Rs. billion)	25.6	32.8	38.3
Adjusted PAT (Rs. billion)	18.3	23.7	27.7
EBITDA Margin (%)	10.3%	12.0%	12.7%
EPS (Rs.)	27.0	35.0	40.9

Operating margins are expected to expand meaningfully as premium products gain traction and cost efficiencies improve.

Motilal Oswal estimates cumulative operating cash flow of Rs. 72 billion between FY26 and FY28, although capital expenditure of around Rs. 39 billion for the Sri City plant could moderate free cash flow generation in the near term.

Investment Perspective

Motilal Oswal believes LG Electronics India is structurally well positioned within the consumer durables sector.

Several factors underpin the brokerage’s positive outlook:

Strong brand leadership across multiple product categories

Premium product mix driving higher margins

Expanding distribution reach

Localization improving cost efficiency

Growing B2B and export opportunities

Low penetration levels in India’s appliance market

Given these structural tailwinds, the brokerage maintains a BUY recommendation with a target price of Rs. 1,860, valuing the stock at 45x FY28 estimated earnings.