Kotak Securities has initiated coverage on LG Electronics India Ltd. with a ‘Reduce' rating and a target price of Rs 1,600, citing fair valuation despite strong industry fundamentals.
The brokerage expects 10% revenue compound annual growth rate over fiscal years 2025 to 2028, supported by double-digit industry growth and premiumisation trends.
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Kotak Securities highlighted LG India's strong parentage and market leadership, noting these factors create a durable competitive moat for the company. The brokerage projects a compound annual growth rate of 11% in earnings before interest, taxes, sepreciation, and amortisation, and 10% in earnings per share over FY2025–2028. Despite these growth prospects, Kotak believes the stock is currently fairly valued.
The shares of LG Electronics' IPO recently debuted on the exchanges on Oct. 14 at a 50% premium over the issue price at Rs 1,719 at the NSE. The shares listed on the BSE with a 50.44% premium at Rs 1,715 over the IPO price of Rs 1,140.
However, just a month after the company reported its second quarter result in which its net profit slipped 27.3% year-on-year. The electronics giant reported a consolidated bottom-line of Rs 389 crore compared to Rs 536 crore in the year-ago period.
The revenue saw a slight growth of 1% to Rs 6,174 crore from Rs 6,114 crore in the corresponding quarter of last year. Higher expenses weighed on profit, while sales were flat in home appliances and air solution segment, they marginally rose in home entertainment segment.
Liabilities in both the home appliances and air solution segment along with home entertainment segment grew in the quarter under review.
Following this, on Nov. 27 the company announced a leadership reorganisation, elevating Sanjay Chitkara to the position of Co-Chief Sales and Marketing Officer, as part of its strategy to drive post-IPO growth.
Yongchan Jung, formerly the manufacturing head of the Noida facility was appointed as the Chief Production Officer at LG Electronics India Ltd.
The company said that the leadership reorganisation is a strategic move to enhance management operations in the India market.
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