LG Electronics India plans to double production capacity with a new facility in Andhra Pradesh, aiming to revive growth after a muted FY26 performance. The company is targeting mid-teen revenue growth for FY27 by focusing on export markets and a new mass-premium product range. Investors are monitoring upcoming summer sales to gauge the company's ability to improve profit margins.
LG Electronics India is entering a critical phase as it looks to expand its manufacturing footprint and recover from a challenging fiscal year 2026. After a year where revenue growth remained flat at 1%, the company is now prioritizing long-term capacity expansion and a strategic shift in its product mix to drive future profitability.
Strategic Expansion at Sri City
A central part of the company's growth strategy is the construction of a third manufacturing plant located in Sri City, Andhra Pradesh. This project, involving an investment of ₹5,000 crore, is expected to be completed over the next three to four years. Once fully operational, the plant is slated to double the company's existing production capacity. This expansion is essential for the company to support its ambitions in both the domestic market and global exports. The company is already leveraging its Pune facility for production but views the new site as a vital export hub for markets in the US and Europe.
Product Strategy and Margin Challenges
The company is diversifying its reach by introducing an 'Essential' series of products. By targeting the mass-premium segment—a sweet spot between budget and high-end offerings—the company hopes to capture a wider share of the Indian consumer durable market. Early results from its top-loader washing machines and sub-1 tonne air conditioners have shown promise. However, this transition comes at a time when profit margins have been under pressure. In FY26, EBITDA margins—a measure of operational profitability—declined by 300 basis points to 9.8%. This dip was driven by a combination of rising commodity costs, a weaker rupee affecting import expenses, and the costs associated with increased recycling initiatives.
Market Position and Outlook
LG Electronics India maintains a strong market presence, particularly in home appliances, which contributed 74% of its revenue in the last fiscal year. As of December 2025, the company held a 33% share in washing machines and 30% in refrigerators. While the stock has seen a 38% rise since its listing in October 2025, the market is now closely watching whether the management can deliver on its target of reaching early double-digit margins in FY27. The company's goal to double its export revenue, currently at 5-6% of total turnover, remains a key lever for growth.
Investors are keeping a close watch on the upcoming summer season. A hot summer and a low sales base from the previous year provide a potential tailwind for sales of cooling products like air conditioners and refrigerators. The key monitorable for the coming quarters will be whether the company can successfully manage the cost of its expansion while simultaneously improving its operating margins through better product mix and increased local sourcing.