LG Electronics India in focus; Goldman Sachs sees 13% upside on faster-than-industry growth outlook

Shares of LG Electronics India Ltd. will be in focus on Wednesday, February 18, after global brokerage firm Goldman Sachs initiated coverage on the stock with a 'Buy' rating.

The brokerage has a price target of ₹1,750 per share, which implies a potential upside of about 13% from Tuesday's closing price.

Goldman Sachs believes the company is well-positioned to outpace industry growth over the near to medium term, driven by a favourable shift in income cohorts and rising penetration in mid- and premium-segment products.

The brokerage also cited LG Electronics India's consistent innovation-led premiumisation strategy, along with parent LG Electronics Inc.'s 'Global South' strategy, which could boost exports and expand manufacturing in India.

However, the brokerage cautioned that rising competitive intensity and elevated commodity prices may limit margin expansion.

The company recently reported a weak set of earnings for the December quarter. Net profit declined 61.6% year-on-year to ₹89.6 crore, while revenue fell 6.4% to ₹4,114.3 crore.

EBITDA dropped 42.6% to ₹195.7 crore, with margins contracting sharply to 4.8% from 7.8% a year earlier.

The company attributed the softness to weaker-than-expected post-festive demand, particularly in compressor-led products.

Margins were further impacted by lower volumes, higher copper and aluminium costs, and rupee depreciation.

Currently, 21 analysts track the stock, with two recommending a 'Sell' and the remaining maintaining a 'Buy' rating.

Shares of LG Electronics India closed 2.24% higher at ₹1,550 on Tuesday and are down about 11% from their post-listing high of ₹1,749.

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