Consumer electronics major LG India on Thursday reported a decline in September quarter (Q2FY26) net profit and a nearly flat growth in revenue amid GST transition issues, higher costs and deferment of purchases by consumers.
Net profit was down 27.3% y-o-y to Rs 389 crore, while revenue grew at a sluggish pace of 1% y-o-y to Rs 6,174 crore, which the company said was led by a nearly one-and-a half month of a slowdown in sales (between August-September) as consumers waited for the GST rate changes to reflect on products such as ACs, TVs and dishwashers, where tax was rationalised to 18% from 28%.
The Q2 results were also the first by the company after its blockbuster IPO last month, which was subscribed 54 times on the final day of its book building, making it one of the most heavily-bid issues on the Indian stock exchanges. It listed at a 50% premium to its offer price on October 14.
The company’s Ebitda fell nearly 28% y-o-y to Rs 548 crore. Margins shrank 350 basis points to around 8.9% versus 12.4% reported a year ago, on higher input and operating costs.
On Thursday, the company’s chief sales officer Sanjay Chitkara said that the firm remains “cautiously optimistic” on its outlook for Q3 as channel inventories stabilise and demand conditions improve. “The winter and wedding season kick in from a Q3 perspective. So, demand conditions will be better. Also, our channel checks suggest that inventories within trade have stabilised after the GST transition issues. We see better operating conditions in the second half of the year,” he told FE.
LG had passed on the GST rate reduction in ACs, TVs and dishwashers to consumers in Q2, though it had taken marginal hikes of about 1.5-2% in categories such as washing machines and refrigerators to deal with elevated material costs during the period. Total expenses during the quarter rose 3% y-o-y to Rs 5,729 crore, pointing to higher inputs costs, analysts said.
Offtake of premium products, Chitkara said, was better than mass and mid-level products in Q2, as consumers opted to quickly upgrade once the GST implementation happened as well as the festive season with Navratri began from September 22.
Despite this, segment-wise revenue from the home appliances and air solutions segment remained flat at Rs 3,947 crore, while revenue from the home entertainment segment rose 3% y-o-y to Rs 2,261 crore.
Chitkara said that the company has launched its new LG Essential Series that aims to provide premium but affordable products to a wider base of consumers as it looks to improve penetration of home appliances across the country. Launched with two home appliance products, the company is expected to bolster this range with new additions in the coming months.
Though the company’s long-term growth prospects appear bright, analysts said, LG’s shares have come off their listing highs, touching levels of Rs 1,674.10 apiece on Thursday on the BSE. This was 1.13% higher versus the previous day’s close. Even after this partial recovery in recent sessions, the stock trades about 4% below its listing high of Rs 1,736.40 apiece seen on October 14.
