LG plans to double overseas revenue share by FY27 by scaling US-specific refrigerator production and targeting growth in exports of microwave ovens in Europe.
The stock fell in December despite a soft quarter amid a contraction in margins due to higher input costs, currency volatility and one-time compliance costs. However, it increased its market share in categories such as refrigerators, ACs, TVs and maintained its leadership in the washing machine category. The March quarter is expected to be good as the company is likely to report double-digit revenue growth and better margins. For FY26, LG has guided for single-digit revenue growth and double-digit Ebitda margin. It also anticipates double-digit revenue growth in FY27 with sustainable margins driven by premium launches, diversified portfolio and strong brand equity.
While higher commodity prices, including copper and aluminum, pose a risk to profitability, LG expects to ease pressure globally, with long-term vendor agreements and strong back-end integration.
InstitutionsAnalysts are bullish on steady growth in market share, export plans, rising prices
The stricter BEE norms started in January, where most five-star refrigerators and air conditioners will be downgraded to four stars unless the stricter standards are met. To comply with the new standards, LG has improved product efficiency and increased prices on new three- and five-star ACs. It expects the recent GST cut to largely offset higher prices.
The company also benefits from a nine-year forward pricing agreement that clears a large potential for higher transfer rates and a long-term incentive package of ₹706 million that boosts capex and strengthens cash flow. Motilal Oswal maintains ‘Buy’ and estimates revenue and PAT to grow by 10% and 23%, respectively, in FY26-28, and margins at 12.7% in FY28 from 10.3% in FY26.
YES Securities has initiated coverage with a ‘Buy’ rating citing growing export penetration, premiumization-led domestic growth and better margins.
