Air conditioners may cost more this summer, but appliance makers are expanding their product portfolios to tap new consumer segments. The newly listed LG Electronics India has raised prices of 5-star ACs by about 9% and 3-star models by 7%, as manufacturers grapple with rising input costs and stricter energy-efficiency norms, according to a report by Motilal Oswal.
According to the report, these moves are helping LG widen its addressable market across both price and capacity bands, supporting growth even as the broader consumer durables industry faces mixed demand conditions. Motilal Oswal, as a result, has reiterated its ‘Buy’ rating. They have set a target price of nearly 1,860 per share. This implies nearly 17% upside from current levels.
Premiumisation and portfolio expansion drive growth
The Motilal Oswal report stated that LG’s growth is being driven by premiumisation and a deeper portfolio, with the company entering new segments such as five-star two-tonne air conditioners, sub-one-tonne models and fixed-speed ACs.
According to the report, this strategy allows the company to participate across a wider range of consumer budgets and room sizes, while also strengthening its presence in the premium appliance segment.
The company has also implemented calibrated price increases across categories to offset cost pressures. Since October 2025, LG has raised prices of 5-star ACs by around 9% and 3-star models by about 7%. Other categories like refrigerators and washing machines saw smaller increases of roughly 2%, the report said.
The price hikes were driven by higher input material costs, rupee depreciation, regulatory changes in scrap procurement pricing and new energy-efficiency norms, according to the report.
Smaller ACs target compact homes
Alongside premium models, LG is also targeting consumers with smaller homes and first-time buyers. The report noted that the company has expanded its Essential Series with sub-one-tonne and 0.9-tonne inverter air conditioners, which, as per the company is designed for compact homes.
Furthermore, LG markets these products via its ‘affordable premium’ segment. This segment, as per the report, offers energy-efficient technology at relatively accessible price points. According to the report, the strategy allows appliance makers to tap demand from underpenetrated markets and first-time buyers, where affordability drives purchase decisions.
After-sales services become a growth lever
The report also noted that the companies are putting more focus on after-sales services as a new revenue stream.
Annual Maintenance Contracts (AMCs) are gaining popularity among consumers who are looking to extend the lifespan of their appliances and avoid costly repairs. LG’s AMC business is projected to grow significantly, with revenue expected to rise from $40 million in 2024 to about $100 million by 2026, the report said.
Market share gains despite mixed demand
Despite mixed demand trends in the consumer durables sector, LG has continued to gain market share across key categories such as televisions, refrigerators and air conditioners, the report noted.
The gains are largely being driven by the company’s premium product mix and broader portfolio expansion, including new models across multiple capacity segments, the report highlighted.
As summer approaches, typically the peak sales period for cooling appliances, manufacturers are betting that a wider product range, spanning premium and affordable segments, will help sustain demand even as prices edge higher.
Conclusion
Motilal Oswal, in its report, highlighted how LG Electronics India has established itself as a strong player in various consumer electrical categories, and it has a positive view on the stock as the industry outlook remains constructive, led by rising preference for premium, energy-efficient products. Additionally, they believe that the low penetration levels continue to offer volume-led growth opportunities.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.