LG Electronics India IPO Subscription Guide for Investors

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LG Electronics India IPO stock market growth graph with LG logo
LG Electronics India IPO stock market growth

The LG Electronics India IPO presents one of the most significant investment opportunities in India’s consumer electronics sector this year. With a valuation of ₹11,607 crore and strong analyst support, this IPO deserves careful consideration from both long-term investors and market participants seeking exposure to India’s rapidly growing home appliances market.

Company Overview and Business Model

LG Electronics India Limited operates as the wholly-owned subsidiary of South Korean giant LG Electronics Inc., commanding a dominant market position across multiple product categories. The company has established itself as India’s number one player in major home appliances and consumer electronics for the six months ended June 30, 2025.

With 28 years of experience in the Indian market, LG operates through two primary segments: Home Appliances & Air Solutions (75% of revenue) and Home Entertainment (25% of revenue). The company’s extensive product portfolio includes washing machines, refrigerators, air conditioners, televisions, and microwaves, with market leadership positions across these categories.

The business model demonstrates remarkable operational efficiency through its integrated manufacturing and distribution network. LG operates two manufacturing plants in Noida and Pune, with production capacity of 14.5 million units annually, making it the largest in-house manufacturer of appliances in India. Additionally, the company is investing $600 million in a third facility in Andhra Pradesh, expected to commence operations by November 2026.

IPO Structure and Valuation Analysis

The IPO is structured as a pure Offer for Sale (OFS) with no fresh capital raising. Parent company LG Electronics Inc. is divesting 10.18 crore shares (15% stake) at a price band of ₹1,080-1,140 per share. This brings the post-IPO promoter holding to 85%, providing scope for future dilutions.

Valuation metrics appear attractive when compared to industry peers:

  • P/E multiple of 35.1x based on FY25 earnings vs. industry average of 47x
  • Post-issue market capitalization of approximately ₹77,380 crore
  • EV/Sales ratio of 3x, trading at a discount to industry peers

The company’s superior financial metrics justify the premium valuation. With an EBITDA margin of 12.8% and PAT margin of 9% in FY25, LG significantly outperforms industry averages of 7% and 4.5% respectively.

Financial Performance and Growth Trajectory

LG Electronics India has demonstrated consistent financial excellence with strong growth across key metrics:

Revenue Growth: Revenue increased from ₹21,352 crore in FY24 to ₹24,367 crore in FY25, representing a 14.1% year-on-year growth.

Profitability Expansion: Net profit surged 46% to ₹2,203 crore in FY25, with profit margins expanding from 7.01% in FY24 to 8.95% in FY25.

Superior Returns: The company posted outstanding ROCE of 42.9% and ROE of 37.1%in FY25, significantly above industry averages. This reflects exceptional capital efficiency and asset utilization.

Cash Generation: LG maintains a debt-free balance sheet with strong free cash flow generation, providing financial flexibility for growth investments.

Market Position and Competitive Advantages

LG’s market leadership stems from several sustainable competitive advantages:

Market Share Dominance: The company holds leading positions across key categories – 33.5% in washing machines, 29.5% in refrigerators, 51% in microwaves, and 27.5% in televisions.

Distribution Excellence: LG operates the largest distribution network among home appliance players with 35,640 B2C touchpoints, 1,006 service centers, and 13,368 engineers providing comprehensive after-sales support.

Manufacturing Scale: With 85% of sales coming from in-house production, LG enjoys cost control, quality assurance, and supply chain flexibility. The company’s localization rate has improved to 54%, reducing import dependency and enhancing margins.

Brand Equity: Nearly three decades of market presence has established LG as a trusted household name, enabling premium pricing and customer loyalty.

Growth Prospects and Market Opportunity

The Indian consumer electronics market presents compelling long-term growth opportunities:

Market Expansion: India’s consumer electronics market is projected to grow from $89.12 billion in 2024 to approximately $125-162 billion by 2030-2034, representing a CAGR of 6.8-9.6%.

Low Penetration Rates: Significant headroom exists with penetration rates of only 4% for microwaves, 11% for air conditioners, and 21% for washing machines compared to 80-90% in developed markets.

Demographic Dividend: Over 50% of Indians will be Gen Alpha and Gen Z by 2029, while more than 40% of households will be upper middle class, driving premiumization trends.

Export Potential: LG’s exports grew 45% year-on-year to $160 million in FY25, representing 6% of revenue. The company plans to expand exports to Europe and other developed markets, leveraging India as a global manufacturing hub.

Investment Risks and Challenges

Despite strong fundamentals, several risk factors warrant consideration:

Royalty Obligations: LG pays 2.3-2.4% of sales as royalty to its parent company, totaling ₹323 crore in FY24. The company faces a contingent liability of ₹3,153 million related to royalty payments, which could be subject to scrutiny.

Intense Competition: The Indian market features aggressive competition from Samsung, Whirlpool, Haier, and domestic players like Godrej, potentially pressuring market share and margins.

Import Dependency: Despite localization efforts, 46% of raw materials are still imported, exposing the company to foreign exchange fluctuations and supply chain disruptions.

Market Volatility: Consumer durables exhibit seasonal demand patterns, particularly for air conditioners and cooling appliances, leading to quarterly revenue fluctuations.

Execution Risk: The ₹5,000 crore investment in the Andhra Pradesh facility represents a significant commitment. Delays or cost overruns could impact financial performance.

Subscription Trends and Market Response

The IPO has generated strong investor interest with several positive indicators:

Analyst Consensus: Leading brokerages including ICICI Securities, SBI Securities, Anand Rathi, and Centrum have assigned “Subscribe” ratings, citing attractive valuation and growth prospects.

Grey Market Premium: Trading at a GMP of 22-28% over the upper price band, indicating strong demand and potential listing gains.

Anchor Investment: The company successfully raised ₹3,475 crore from 149 institutional investors, including marquee names like Goldman Sachs, BlackRock, and Government of Singapore.

Subscription Status: Day 1 response showed steady interest across categories, with retail investors showing 37% subscription and overall subscription at 33%.

Long-term vs Short-term Investment Perspective

Long-term Investment Case: LG Electronics India offers compelling long-term value through its market leadership, operational excellence, and exposure to India’s structural consumption growth story. The company’s focus on premiumization, B2B expansion, and export development provides multiple growth levers.

Short-term Trading Opportunity: With strong GMP and positive analyst sentiment, the IPO presents potential listing gains. However, investors should be prepared for volatility given the broader market conditions and large issue size.

Expert Recommendations and Final Verdict

Investment Recommendation: SUBSCRIBE for long-term wealth creation.

The consensus among market experts strongly favors subscription, with over 15 brokeragesassigning positive ratings. Key reasons include:

  1. Attractive Valuation: P/E of 35.1x vs. peer average of 47x
  2. Market Leadership: Dominant positions across key categories
  3. Financial Excellence: Superior margins and returns
  4. Growth Runway: Beneficiary of India’s consumption story and premiumization trends
  5. Export Opportunity: Positioning India as global manufacturing hub

Risk Mitigation: Investors should consider position sizing and monitor royalty payment trends, competitive intensity, and execution of expansion plans.

The LG Electronics India IPO represents a rare opportunity to invest in a market-leading consumer electronics company with strong fundamentals, attractive valuation, and significant growth potential. While short-term volatility is possible, the long-term investment thesis remains compelling for investors seeking exposure to India’s evolving consumer landscape.

Minimum Investment: ₹14,820 for 13 shares at upper price band
Subscription Period: October 7-9, 2025
Expected Listing: October 14, 2025

This IPO merits serious consideration from investors looking to participate in India’s consumer electronics growth story through a well-established market leader with proven execution capabilities.

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