Strong Stock Market Debut Expected
Shares of LG Electronics India are primed for a remarkable entry into the stock market, with brokerage firm Motilal Oswal projecting a potential surge of up to 83% from the initial issue price. The brokerage initiated coverage on the consumer durables giant on Tuesday, October 14, the same day as its anticipated listing, signaling strong institutional confidence.
Motilal Oswal Issues ‘Buy’ Rating on Listing Day
Marking a bullish start, Motilal Oswal issued a “Buy” recommendation with a base case price target of ₹1,800 per share, implying a potential upside of 58% from the issue price of ₹1,140. In a more optimistic “bull case” scenario, the firm set a price target of ₹2,085, which would represent a remarkable 83% increase.
Strong Positioning in a Rapidly Expanding Market
India’s home appliances and consumer electronics market is forecasted to grow at a CAGR of 14% between 2024 and 2029. LG Electronics India, as a dominant player across multiple product categories, is strategically placed to harness this expansion. Motilal Oswal emphasized the company’s leadership in this fast-evolving landscape as a key driver of sustained performance.
Robust Financial Metrics and Strategic Vision
The brokerage expects LG Electronics India to maintain premium valuation multiples, underpinned by impressive financial indicators. Projections include a Return on Equity (RoE) of 30% and a Return on Invested Capital (RoIC) of 66% by FY2028. These figures reflect robust operating cash flow generation, a focused localization strategy designed to bolster gross margins, and continued investment in high-margin B2B and AMC segments.
Extensive Distribution and After-Sales Network
Distribution remains one of LG Electronics India’s critical strengths. The company operates one of the country’s most extensive after-sales networks, with over 1,000 service centers nationwide. Additionally, a consistent allocation of nearly 4.5% of revenue towards advertising is expected through FY2028, reinforcing brand visibility and consumer engagement.
Risks on the Horizon
Despite the positive outlook, certain risk factors may challenge the company’s trajectory. These include potential increases in royalty payments to its South Korean parent, fluctuations in raw material prices, and escalating competition within the domestic market.
Record-Breaking IPO Response
LG Electronics India’s initial public offering garnered unprecedented interest, with total bids exceeding ₹4.5 lakh crore. This makes it the most heavily subscribed IPO in Indian history, eclipsing the previous record held by Bajaj Finance, and underscoring investor enthusiasm for the brand’s market prospects.
