LG Electronics India: ICICI Securities Recommends BUY on Steady Q2 Performance, Raises Price Target

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AuthorAditi Singh|Published at:
LG Electronics India: ICICI Securities Recommends BUY on Steady Q2 Performance, Raises Price Target
Overview

ICICI Securities has maintained a BUY rating on LG Electronics India, increasing its target price to INR 1,875. The firm noted LG's steady Q2FY26 performance, market share gains in washing machines, RACs, refrigerators, and TVs. Margins were impacted by elevated advertising and go-to-market investments, expected to normalize in H2FY26. Strategic increases in localization and the commencement of the Sri City plant are anticipated to improve margins and operational control.

ICICI Securities has released a research report on LG Electronics India, upholding its 'BUY' recommendation and revising the target price upwards from INR 1,700 to INR 1,875. The report indicates that LG Electronics India delivered a steady performance in the second quarter of the financial year 2025-2026 (Q2FY26), navigating an unfavorable summer season and geopolitical tensions.

Key takeaways from the report include LG Electronics India's ability to maintain its industry-leading market share in washing machines. The company also reported gains in market share for Room Air Conditioners (RACs), refrigerators, and televisions, which the report attributes to strong brand appeal.

Margins in Q2FY26 were affected by increased advertising spend, investments in Go-To-Market strategies, and strong channel support. However, ICICI Securities believes these margin pressures are temporary and are expected to normalize in the second half of FY26 (H2FY26).

Looking ahead, LG Electronics India aims to enhance its localization efforts by 200–300 basis points annually, targeting approximately 70% localization. This strategic move is projected to reduce foreign exchange (FX) impact by 3–4%, thereby enabling margin expansion.

The commencement of operations at the Sri City plant is expected to provide LG Electronics India with better control over product quality and supply chain management. To counter rising input costs, the company implemented a 1.5–2% price hike in October 2025.

Outlook
ICICI Securities models LG Electronics India to achieve revenue and Profit After Tax (PAT) Compound Annual Growth Rates (CAGRs) of 10.1% and 8.8%, respectively, over the fiscal years 2025 to 2028 (FY25–28E). The revised target price of INR 1,875 is based on a Discounted Cash Flow (DCF) valuation, implying a target Price-to-Earnings (P/E) ratio of 45 times the estimated FY28E Earnings Per Share (EPS).

Impact
This research report suggests a positive outlook for LG Electronics India, driven by strategic initiatives, market leadership, and expected margin improvements. The maintained 'BUY' rating and increased target price are likely to be viewed favorably by investors, potentially leading to positive stock performance. The analysis highlights the company's operational strengths and growth potential in the Indian consumer durables market.

Impact on LG Electronics India Stock: 8/10
Impact on Indian Consumer Durables Sector: 6/10

Difficult Terms

  • Q2FY26: The second quarter of the financial year 2025-2026.
  • Industry-leading market share: Holding the largest percentage of sales compared to competitors in a specific product category.
  • RACs: Room Air Conditioners.
  • Strong brand pull: The ability of a brand to attract customers and drive sales due to its reputation and desirability.
  • Margins: The difference between revenue and the cost of goods sold, indicating profitability.
  • Elevated ad-spend: Increased expenditure on advertising and promotional activities.
  • GTM investment: Go-To-Market investment, referring to strategic spending to launch or promote products in the market.
  • Channel support: Assistance provided to distributors and retailers to help them sell the company's products effectively.
  • Normalise: Return to a typical or expected level after a period of deviation.
  • H2FY26: The second half of the financial year 2025-2026.
  • Localization: Increasing the use of domestically produced components and labor in manufacturing.
  • 200–300bps: Basis points. 100 basis points equal 1 percentage point. So, an increase of 200-300bps means an increase of 2-3 percentage points.
  • FX impact: Foreign exchange impact, referring to the effect of currency fluctuations on financial results.
  • Sri City plant: A specific manufacturing facility located in Sri City, Andhra Pradesh, India.
  • Commencement: The beginning or start of operations.
  • Supply chain: The network of all the individuals, companies, and activities involved in the creation and sale of a product, from the delivery of source materials to the manufacturer through to its eventual delivery to the end user.
  • Price hikes: Increases in the selling price of products.
  • Input cost pressures: Rising costs of raw materials and components required for production.
  • Outlook: A forecast or prediction of future conditions.
  • CAGR: Compound Annual Growth Rate, a measure of average annual growth over a period, assuming profits are reinvested.
  • FY25–28E: Fiscal Year 2025 to Fiscal Year 2028, with 'E' denoting estimates.
  • DCF-based: Discounted Cash Flow, a valuation method that estimates the value of an investment based on its expected future cash flows.
  • Revised TP: Revised Target Price, the new price level at which an analyst expects a stock to trade.
  • Implied target P/E: The Price-to-Earnings ratio at the target price, indicating how expensive the stock is relative to its earnings.
  • FY28E EPS: Estimated Earnings Per Share for the Fiscal Year 2028.
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