LG Electronics India has made a stellar debut on the Indian stock market, outshining its South Korean parent company in market value. Shares of LG Electronics India surged 50% on the first day of trading, reaching ₹1,715 on the Bombay Stock Exchange (BSE) and ₹1,710.10 on the National Stock Exchange (NSE), significantly exceeding the initial public offering (IPO) price of ₹1,140. This impressive performance propelled the Indian subsidiary's market capitalization to approximately $13.13 billion (Rs 1.16 lakh crore), surpassing LG Electronics Inc.'s valuation of $8-9 billion on the Seoul exchange.
The ₹11,607 crore IPO consisted entirely of shares divested by LG Electronics Inc. and garnered substantial investor interest, with an oversubscription rate of 54 times. The qualified institutional buyers' segment was oversubscribed 166 times, while the retail investors' portion achieved 3.5 times subscription. Prior to the official listing, the shares traded at a 31% premium in the grey market, signaling strong investor confidence.
This landmark event marks the best first-day gain for an IPO raising at least ₹10,000 crore since Coal India's 40% surge in 2010. It underscores the overwhelming investor confidence in the company's prospects and India's consumer growth story. Experts attribute LG Electronics India's success to sensible valuations, its market leadership position, and clear earnings prospects. The company holds a dominant position in India's consumer durables sector, consistently outperforming competitors in profitability and expansion.
LG Electronics India's market capitalization now exceeds that of its listed peers in the Indian consumer durables market, including Whirlpool of India ($1.7 billion), Voltas ($5.8 billion), and Havells India ($10.4 billion). This achievement is particularly noteworthy, as it typically takes years for Indian subsidiaries to surpass their parent companies' market capitalization, as seen with Maruti Suzuki and ITC.
The IPO proceeds, amounting to 1.8 trillion won ($1.26 billion), will go to LG Electronics' headquarters and will be used to secure new growth engines through investments in future businesses and enhance shareholder value. CEO Cho Joo-wan stated that the listing would elevate India as a pivotal hub in LG Electronics' Global South strategy, accelerating the growth of both LG Electronics and its Indian subsidiary.
The company is committed to strengthening its localized business system in India, encompassing production, R&D, sales, and services. In line with this, LG is investing $600 million to construct a new factory in Sri City, Andhra Pradesh, in addition to its existing plants in Noida and Pune. This expansion will increase the company's annual production capacity in India to 3.6 million refrigerators, 3.75 million washing machines, 4.7 million air conditioners and 2 million TVs.
LG Electronics India has also unveiled its "Make for India" vision, showcasing a new range of home appliances tailored to local lifestyles and pricing. These specialized appliances, including refrigerators, washing machines, air conditioners, and microwave ovens, will be produced locally and launched in the Indian market starting next month.
The listing of LG Electronics India is viewed as a landmark event, highlighting India's growing economic significance and its attractiveness as a global listing and investment destination.
