Global brokerage firm Jefferies has initiated coverage on LG Electronics India with a ‘Buy’ rating and a target price of INR 1,980, implying an upside potential of ~22% from the current market price of INR 1,631 per share. Jefferies coverage on LG India underscores a bullish stance on the company’s leadership position in India’s fast-growing consumer durables market and its compelling valuation discount versus peers.
A Strong Play on India’s Discretionary Spending Boom
Jefferies describes LG Electronics India as a “strong play on India’s discretionary consumption story,” citing its diversified product mix, premium brand equity, and integrated manufacturing ecosystem as key pillars of strength. The brokerage highlights LGEL’s market leadership across categories — refrigerators, washing machines, air conditioners, and televisions — alongside a robust distribution footprint and consistent innovation pipeline.
The company commands #1 market positions in refrigerators (30% share) and washing machines (33%), and is among the top two players in residential air conditioners, where inverter models dominate volumes. Jefferies notes that LGEL’s diversified portfolio — refrigerators (27% of FY25 sales), washing machines (21%), air conditioners (22%), and televisions (20%) — provides resilience against seasonal demand fluctuations.
Premiumisation and Integration Drive Margins
Jefferies attributes LGEL’s industry-leading profitability to its focus on premium segments and backward integration. The firm estimates that over 55% of production is now in-house, including compressors that serve both internal needs and external sales — a move that enhances pricing power and supply chain reliability.
Premiumisation remains a powerful tailwind, with LGEL holding a 63% share in OLED TVs and 43% in side-by-side refrigerators, both commanding higher average selling prices. The company’s marketing intensity is also notable, spending 4% of annual sales on brand-building — above industry averages — supported by R&D and design capabilities from its South Korean parent.
Financial Outlook: Robust Growth and Efficiency
Jefferies projects LGEL’s revenues to grow at 13% CAGR and profits at 17% CAGR over FY26–28, aided by capacity expansion, normalising inventory levels, and modest price increases in key categories. The firm expects operating margins to reach 12.8% by FY28, with FY25 return ratios among the highest in the sector — 45% ROE and 55% ROCE.
Ongoing capital expenditure at the new Sri City plant is fully funded through internal accruals, reflecting LGEL’s debt-free balance sheet and strong cash reserves. Jefferies adds that the company’s expansion and localisation strategy positions it to benefit from rising domestic demand and potential export opportunities.
Valuations: Discount to Peers, Scope for Rerating
At the current valuation of 43x FY27 estimated earnings, LG Electronics India trades at a 10–15% discount to peers such as Havells India and Blue Star, despite comparable or superior margins. Jefferies believes this discount provides room for multiple reratings as the company consolidates its leadership and scales its premium product offerings.
The brokerage assigns a target PE multiple of 47x on December 2027 EPS, in line with the sector average, suggesting that LGEL’s growth story is yet to be fully priced in by the market. The stock was trading around INR 1,631 on Tuesday, up about 43% from its IPO price of INR 1,140.
Risks and Sector Context
Jefferies coverage on LG India also cautions that downside risks could stem from demand slowdowns, execution delays in the Sri City plant, competitive pressures, or commodity price volatility. However, it argues that rising household incomes, low penetration in key categories, and LGEL’s strong brand franchise create a long runway for growth in India’s underpenetrated consumer durables market.
Jefferies coverage on LG India comes amid growing analyst optimism. JPMorgan and Morgan Stanley also recently initiated coverage on LG Electronics India with Overweight ratings, citing its balanced portfolio, scale advantages, and localisation-led margin expansion. Both firms see double-digit upside potential in the medium term.
Market Reaction
Following Jefferies coverage on LG India, the company’s shares rose about 2% to INR 1,648.60 on the NSE, snapping a two-session losing streak. The stock, which debuted in mid-October at a 50% premium to its IPO price, remains a closely watched new entrant in India’s consumer durables sector with a market capitalisation of over INR 1.1 lakh crore.
Verdict
Jefferies coverage on LG India reaffirms the view that the company is well-positioned to capture India’s premiumisation trend, leveraging its technological edge, brand trust, and manufacturing integration. With structural tailwinds in urban consumption, the stock’s relative valuation discount and balance-sheet strength make it a compelling long-term investment story in the Indian consumer electronics space.
For more details related to IPO GMP, SEBI IPO Approval, and Live Subscription stay tuned to IPO Central.