LG Electronics: Strong Brand, Intensifying Competition; Avendus Spark Initiates Coverage — Check Target Price

Avendus Spark has initiated coverage on LG Electronics India Ltd. with a Reduce rating and a target price of Rs 1,536, citing intensifying competition, capped margin expansion potential and limited near-term upside following the sharp post-IPO rally.

LG Electronics India is the market leader in the domestic white goods space, with a dominant position in refrigerators and washing machines and a top-three ranking in air conditioners and televisions, the brokerages said on Wednesday. This leadership has been built over decades, supported by early entry into Indian households in the 1990s, a strong and diverse product portfolio, and a consistent focus on innovation and quality, it added.

Avendus Spark’s channel checks across multi-brand outlets and exclusive brand stores highlight that LG’s leadership in key categories stems from its wide range of SKUs, spanning entry-level to premium products, and industry-leading product quality.

Better product longevity has translated into strong repeat purchases and sustained brand loyalty. In addition, LG has maintained high dealer and customer engagement through frequent new model and product launches, ensuring it stays ahead of evolving consumer preferences.

LG enjoys a particularly strong foothold in premium and super-premium categories, which account for around 25% of its overall revenue. In segments such as side-by-side refrigerators and front-load washing machines, the company commands a market share of over 45%, significantly ahead of its nearest competitors, the brokerage said in its note. This premium dominance has historically supported better realisations and reinforced LG’s brand positioning.

According to Avendus Sparks one of LG’s biggest strengths continues to be its vast distribution network. The company has over 35,000 touchpoints across India, including around 750–800 exclusive brand stores, many of which are located in tier 2 and tier 3 cities and towns.

While the rise of e-commerce, modern trade and expanding reach of rival brands has increased customer choice and reduced bargaining power, LG’s extensive physical presence still provides a strong competitive moat.

LG is fairly backward-integrated, with the majority of its products manufactured in-house at its two existing facilities in Pune and Noida. Only a limited set of entry-level products is currently outsourced. To further strengthen its manufacturing base, the company is investing around Rs 50 billion in a third facility at Sri City in Andhra Pradesh.

Despite these strengths, Avendus Spark flags rising competition as a major challenge. Newer entrants such as Haier, Voltas-Beko and Bosch are steadily gaining ground, even in premium and super-premium categories that were once dominated by LG and Samsung. This has led to gradual market share erosion for incumbents.

LG’s revenue CAGR over the past five years has lagged industry growth in key segments. Refrigerator and washing machine revenues grew at 5% and 10%, respectively, compared with industry growth of 7% and 11% over the same period. Increasing fixed costs linked to the upcoming manufacturing facility further limit the scope for margin expansion in the medium term.

Avendus Spark expects LG Electronics India to deliver revenue, Ebitda and PAT CAGR of 11%, 20% and 18%, respectively, over FY26–28E. However, with the recent rally post IPO, the brokerage believes that near-term positives are already priced in.