- Goldman Sachs initiates Buy rating on LG Electronics India with Rs 1,750 target
- LG India expected to grow revenue at 15% CAGR from FY26 to FY28 in premium segments
- Strong R&D, Bengaluru centre, and localisation to boost innovation and margins
Goldman Sachs has initiated coverage on LG Electronics India with a 'Buy' rating and a 12-month price target of Rs 1,750, implying an upside of about 15% from current levels. The brokerage expects the consumer durables major to benefit from favourable demographic shifts, rising premiumisation, and sustained innovation-led market leadership.
LG Electronics India, which has built a dominant presence over nearly three decades, is seen as well positioned to outpace industry growth, driven by increasing penetration of appliances and a shift toward higher-value products.
Goldman Sachs expects India's consumer durables sector to grow at a revenue CAGR of 10.2% over the next five years, up from 8.9% in the previous five-year period. This acceleration is likely to be supported by rising incomes, improving affordability, and growing adoption of appliances across households.
Within this expanding market, LG Electronics India is expected to benefit disproportionately due to its strong positioning in premium segments. The brokerage estimates the company could deliver revenue growth at a 15% CAGR between FY26 and FY28, supported by higher penetration of premium products and continued gains in average selling prices.
Innovation, Localisation To Support Margins
Goldman Sachs highlighted LG Electronics India's strong innovation pipeline, backed by its parent company's global research capabilities, as a key competitive advantage. Its R&D centre in Bengaluru and expanding local manufacturing footprint are expected to strengthen product differentiation and improve operational efficiency.
Backward integration and localisation efforts, including in compressors and key appliance components, are likely to enhance margin resilience over time, even as near-term profitability may face pressure from elevated commodity costs.
The brokerage also sees LG's expanding manufacturing capacity and supply chain localisation as critical to navigating currency volatility and improving long-term cost structures.
Earnings Recovery And Demand Catalysts Ahead
Goldman Sachs expects earnings to remain under pressure in the near term but forecasts a strong recovery thereafter, projecting a 22% EPS CAGR between FY26 and FY28. Demand is likely to be supported by continued momentum in premium categories and volume growth driven by LG's Essential product lineup.
Despite the stock trading at about 38x FY28 estimated earnings, Goldman believes the premium valuation is justified given LG Electronics India's growth visibility, strong balance sheet, and superior return ratios.
However, risks remain, including intensifying competition from global and Chinese players, potential royalty increases, and demand fluctuations.
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