LG Electronics India's Initial Public Offering (IPO), opening October 7, 2025, has generated significant buzz in the market. The IPO aims to raise ₹11,607.01 crore through an offer for sale of 10.18 crore shares. With a price band of ₹1,080 to ₹1,140 per share, the listing is expected on October 14, 2025, on both the NSE and BSE. But is investing in this IPO a smart bet for long-term investors? A comprehensive analysis of the company's strengths, weaknesses, and market dynamics is crucial to address this question.

Company Overview

LG Electronics India is a market leader in the Indian home appliances and consumer electronics sector (excluding mobile phones). The company manufactures and sells a wide array of products, including refrigerators, air conditioners, washing machines, and televisions. As a wholly-owned subsidiary of LG Electronics Inc., it leverages the globally recognized "LG" brand and benefits from licensed technology and R&D. LG enjoys a substantial market share across key product categories in India, including refrigerators (30%), washing machines (34%), and panel TVs (28%). This strong market presence is supported by a vast distribution network comprising 777 LG brand shops and 35,600 B2C touchpoints.

Financial Performance and Growth Prospects

LG Electronics India has demonstrated robust financial performance in recent years. FY25 revenue grew by 14% year-on-year to ₹24,367 crore, making it the largest consumer durables company in the Indian stock market. EBITDA rose by 40% to ₹3,110 crore, resulting in a 13% EBITDA margin, and PAT jumped 46% to ₹2,203 crore, leading to a 9% net margin. The company's revenue from operations increased at a CAGR of approximately 10.70% from Fiscal 2023 to Fiscal 2025. Despite a slight dip in Q1FY26 due to an early monsoon impacting the summer season, the overall outlook for the consumer durables industry remains positive.

The company is expanding its manufacturing capabilities with a ₹5,001 crore investment in a new plant in Andhra Pradesh, expected to be operational by March 2027. This expansion, along with ongoing brownfield capex, provides growth visibility for the future.

Strengths

• Market Leadership: LG Electronics India holds a leading position in the Indian home appliances market.
• Strong Brand Equity: The "LG" brand is well-recognized and trusted by Indian consumers.
• Extensive Distribution Network: The company has a wide reach across India, ensuring product availability and service.
• Efficient Operations: High capital efficiency and strong profitability compared to peers.
• Growth Potential: Expansion plans and a growing Indian appliances and electronics sector.

Risks and Concerns

• Offer for Sale (OFS): The IPO is entirely an OFS, meaning the proceeds will go to the parent company, LG Electronics Inc., and not to the Indian subsidiary. This could potentially affect the company's long-term growth prospects.
• Dependence on Parent Company: LG Electronics India relies on its parent company for technology and brand licensing, and any adverse changes in this relationship could impact the business.
• Contingent Liabilities: The company has significant outstanding contingent tax claims.
• Royalty Payments: LG Electronics India pays a royalty to its parent company for technology use and brand name, which may attract regulatory scrutiny.
• Competition: The Indian consumer electronics market is competitive, with both domestic and international players.

Valuation

At the upper price band of ₹1,140, LG is valued at 35.1x FY25 earnings. While this may seem high, analysts suggest it is fair compared to peers, given the company's strong growth visibility, innovation pipeline, and deep distribution network. The market capitalization of LG India is valued near its South Korean parent.

Market Sentiment

India's IPO market has been robust in 2025, with a significant increase in the number of companies listing and the amount of capital raised. Investor confidence is high, and the IPO pipeline remains healthy.

Conclusion

LG Electronics India's IPO presents a mixed bag for long-term investors. The company boasts a strong market position, brand recognition, and financial performance. However, the fact that the IPO is an offer for sale and the company's reliance on its parent company are potential concerns.

For investors with a long-term perspective and a high-risk tolerance, LG Electronics India's IPO could be a worthwhile investment. The company's strong fundamentals and growth potential make it an attractive option in the Indian consumer durables market. However, investors should carefully consider the risks and conduct their own due diligence before investing.