LG Electronics India IPO: Should you apply?

Summary: LG Electronics India, an established consumer electronics brand, is set to open its IPO on October 7, 2025. Despite being a household name, the company faces threats from up-and-coming players. Let’s analyse its strengths, weaknesses and past financials to help you decide if LG Electronics India is worth subscribing to.

The LG Electronics India IPO (initial public offering) will open for subscription on October 7, 2025 and close on October 9, 2025. The consumer electronics brand aims to raise Rs 11,607 crore entirely through an offer for sale (OFS).

Below is a summary of the company’s business, financials, strengths, risks and valuation to help you make an informed investing decision.

What the company does

LG Electronics India, a wholly owned subsidiary of LG Electronics since 1997, is the market leader in India’s home appliances and consumer electronics space (excluding mobile phones). It dominates key categories such as washing machines, refrigerators, TVs, air conditioners and microwaves.

Backed by its global parent’s strong brand and R&D, LG has been at the forefront of innovation, introducing inverter ACs and stainless-steel water purifier tanks ahead of its peers. The company’s wide product portfolio, deep consumer understanding and focus on quality have made it one of India’s most trusted appliance brands.

Track record and valuation

In terms of numbers, LG Electronics India has seen modest growth in its revenue, increasing by nearly 11 per cent from FY23 to FY25. However, its earnings before interest and tax (EBIT) surged by nearly 31 per cent during the same period. The company also experienced a steady rise in its net income (profit after tax), growing at a rate of 28 per cent over the three-year period.

At the upper end of the price band (Rs 1,140), the stock is expected to be valued at 38 times its TTM (trailing twelve months) earnings and 12 times its book value. In comparison, LG Electronics India’s peers trade at a P/E of almost 68 times and a P/B of 8.3 times.

The good

Here are some of the key strengths of LG Electronics India.

#1 Market leader in the consumer electronics space

LG Electronics India has maintained its position as the number one player in India’s home appliances and consumer electronics market (excluding mobile phones) from 2022 to mid-2025, according to a Redseer Report. It leads key categories such as washing machines, refrigerators, televisions, air conditioners and microwaves, commanding the largest market share in the offline segment.

#2 Large-scale production capacity

LG Electronics India operates two major manufacturing hubs in Noida and Pune, which together contribute over 85 per cent of its total sales. These plants give the company strong control over product quality, costs, and delivery timelines. With advanced automation, ranging from robotic systems to smart monitoring, LG has boosted efficiency and raised capacity utilisation across key product lines.

#3 Highly efficient business model

The company boasts high profitability and capital efficiency among peers in the home appliances and consumer electronics space. In FY24, it recorded the highest return on capital employed (ROCE) at 45.31 per cent, well above the industry average of around 17 per cent. With a short working capital cycle of just 16 days and a free cash flow conversion of nearly 60 per cent, the company maintains a highly efficient business model. Its EBITDA and net profit margins of 10.4 per cent and 7 per cent, respectively, rank among the best in the industry.

The bad

Despite being a market leader, LG Electronics India faces certain risks.

#1 Reliance on a handful of suppliers

LG Electronics India maintains a diversified supplier base, with its top five and top 10 suppliers accounting for 22 and 32 per cent of total raw material purchases, respectively. While most materials are sourced from multiple vendors, the company remains partly dependent on a few key suppliers for critical inputs like steel, resins and air-conditioner components. It also sources some materials from overseas, including China, exposing it to geopolitical and supply-chain risks.

#2 Revenue concentration

LG Electronics India generates the bulk of its revenue from its Home Appliances and Air Solution segment, which contributed over 78 per cent of total revenue in the quarter ended June 2025. Within this segment, refrigerators, washing machines, air conditioners and televisions together account for over 90 per cent of sales. This concentration makes the company’s performance closely tied to demand trends in these key categories, which, if they decline, can significantly affect LG Electronics India’s financials.

#3 Increasing competition from domestic and foreign players

LG Electronics India operates in a highly competitive market that includes domestic, Chinese, and global players such as Samsung, Whirlpool, Sony, Voltas and Blue Star. Domestic brands leverage their local insights and affordability to attract price-sensitive buyers, while global players focus on premium quality and advanced features to appeal to aspirational consumers. As a result, LG faces stiff competition in the consumer electronics market to maintain its leadership.

Where will the IPO proceeds go?

Given that the issue is entirely an offer for sale (OFS), LG Electronics India will not receive any of the IPO proceeds. The proceeds from the offer will be received by the selling promoter post the deduction of any offer-related expenses and taxes.

So, should you apply for the LG Electronics India IPO?

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