LG Electronics India share price jumped nearly 8% intraday before giving up some of the gains. The stock was trading around 4% higher later in the session, emerging among the top midcap gainers. One of the key reasons behind this surge was the stronger-than-expected first quarter performance.
But the key question is – can strong appliance demand, premium products and improving margins keep the momentum going?
In its latest report, the brokerage house Nuvama believes there is still room for the stock to move higher. The brokerage has retained its ‘Buy’ rating and raised its target price to Rs 1,910 from Rs 1,820. Based on the current price of Rs 1,578, this implies around 21% upside.
Let’s take a look at the three key reasons behind Nuvama’s outlook –
Growth is coming from more than one product
LG Electronics India’s first-quarter numbers showed broad based growth.
Revenue increased 15% year-on-year, while Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) rose 26%. Adjusted Profit After Tax (PAT) increased 28%. All three numbers were ahead of Nuvama’s estimates.
The home appliances and air solutions business, which contributes around 77% of revenue, grew 14% year-on-year. Washing machines, refrigerators and air conditioners supported the performance.
According to Nuvama, “Home Appliances & Air Solution revenue grew 14% YoY to Rs 5,580 crore,” This was driven by strong summer demand for air conditioners and healthy washing machine growth.
The home entertainment business delivered an even stronger performance.
Revenue jumped 22%, while Earnings Before Interest and Taxes (EBIT) increased 49%. Premium and larger-screen televisions were among the key drivers.
Premiumisation is helping margins
Strong sales are one part of the story. The other is profitability.
LG Electronics India’s home entertainment EBIT margin expanded sharply to 19%. This was because of premium products, a better product mix, lower promotional spending and improved cost structures.
What is driving this change?
Consumers are increasingly opting for higher-end products such as French-door and side-by-side refrigerators, larger-capacity washing machines and premium televisions.
Nuvama estimates that LG has taken 7-15% price hikes across key categories over the past six months. These price increases have helped the company absorb higher input costs while supporting revenue and margins.
The brokerage said the company’s performance reflects “strength of portfolio diversification, dominance and execution.”
Exports could become another growth lever
There is another part of the story that investors may be watching closely – exports.
LG Electronics India saw export growth during the quarter, with large-capacity refrigerators and its LG Essential Series supporting expansion across Asia, the Middle East and Africa.
The company’s Sri City facility could also play a bigger role.
Nuvama in its report noted, “The Sri City facility, alongside localisation and India’s cost competitiveness and scale, should strengthen LGEIL as a preferred export hub.”
Management is now positive of exceeding its earlier FY27 guidance of mid-teens revenue growth and early double-digit EBITDA margins.
What is Nuvama expecting from the stock?
Nuvama has raised its FY27 Earnings Per Share (EPS) estimate by 2% after the first-quarter performance. The brokerage has maintained its ‘Buy’ rating, valuing the company at 48 times June 2028 earnings. Nuvama added, “We believe LG Electronics India’s Q1 performance is superior to most peers.”
Disclaimer: This article is based on research reports from one or more brokerage firms and is for informational purposes only. The views, target prices, and recommendations expressed are those of the respective brokerage firms and do not reflect the official policy or position of Financial Express. This 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 before making any investment decisions.