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Motilal Oswal Report
LG Electroncis India Ltd. has established itself as a strong player in various consumer electrical categories, such as TVs, refrigerators, washing machines, room ACs, and microwave ovens. The industry outlook remains constructive, led by rising preference for premium, energy-efficient products, while low penetration levels continue to offer volume-led growth opportunities.
The brokerage estimates a CAGR of ~10%/22%/23% in revenue/Ebitda/PAT over FY26-28. Motilal Oswal estimates LG's operating profit margin to expand to 12.0%/12.7% by FY27/FY28 vs 10.3% in FY26. It has consistently generated positive operating cash flows over the years.
The brokerage estimates a cumulative operating cash flow of Rs 7,200 crore during FY26-28; however, its capex plans for the Sri City plant (Rs 3,900 crore to be spent during FY26-28E) are expected to moderate its free cash flow. Cumulative FCF during FY26-28 is estimated at Rs 3,300 crore.
The stock trades at 46x/39x FY27/FY28E EPS. Motilla Oswal values LG at 45x FY28E EPS to arrive at a target price of Rs 1,860. Reiterate Buy.
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