LG Electronics India IPO: How Korean Appliances Major Stacks Up Against Indian Listed Peers

LG Electronics India has filed its preliminary papers for its initial public offering on Friday. The company reported a revenue of Rs 6,408.8 crore and a profit of Rs 679.7 crore for the six-month period ending in June. With a return on capital employed of 18.04%, LG stands as a formidable force in the sector.

The consumer electronics giant will be selling up to approximately 10.2 crore shares in LG Electronics India Ltd. through the offer.

The stake sale by the South Korean parent will represent 15% of the post-offer stake in the Indian arm. The issue will include no fresh issue of shares, and the offering will be a pure offer for sale, according to the draft red herring prospectus.

LG's draft filing for the Dalal Street listing followed fellow South Korean multinational Hyundai Motor Corp.'s Rs 27,870-crore IPO of its Indian subsidiary in October. Bloomberg News previously reported that LG is expected to raise between $1 billion and $1.5 billion through a stake sale. This move could boost the IPO-bound LG Electronics India's valuation to $13 billion, positioning its listing as one of the largest in the country.

LG's profit margins and scale give it a clear edge, outpacing even close competitors like Havells India Ltd. in profitability.

LG Electronics stands out with a revenue of Rs 6,408.8 crore and a profit of Rs 679.7 crore. This performance places LG ahead of close competitors like Havells, which recorded Rs 5,806.2 crore in revenue and Rs 407.5 crore in profit.

Other competitors demonstrate solid financials—Blue Star with Rs 2,865.4 crore in revenue and Rs 168.8 crore in profit, Whirlpool with Rs 2,496.9 crore in revenue and Rs 145.3 crore in profit, and Voltas with Rs 4,921 crore in revenue and Rs 335 crore in profit.

LG's return on employed capital of 18.04% is close to Havells (19.41%) and Blue Star (19.88%), but far superior to Whirlpool (4.26%) and Voltas (4.37%).

Peers like Voltas, with a PE ratio of 221.53, and Whirlpool at 111.65, have significantly higher valuation multiples.

Return on Equity

Havells and Blue Star lead the RoE race with 18.23% and 17.37%, slightly edging out LG.

LG Electronics India operates in two key segments: home appliances and air solutions and home entertainment. It has firmly established itself as the market leader in major home appliances and consumer electronics, excluding mobile phones.

The company holds the top position in India across product categories such as washing machines, refrigerators, panel TVs, inverter air conditioners, and microwaves as per the value market share in the offline channel, stated the draft red herring prospectus. This dual focus on high-demand product categories and offline market strength has positioned LG as a go-to brand for Indian consumers.