💰 Financial Performance

Revenue Growth by Segment

Home Appliance & Air Solution (H&A) grew 16.5% YoY to INR 18,268 Cr in FY25, while Home Entertainment (HE) grew 7.5% YoY to INR 6,099 Cr. In Q2 FY26, HE revenue grew 3% YoY to INR 2,226 Cr, while H&A revenue was flat at INR 3,948 Cr.

Geographic Revenue Split

Domestic sales contribute approximately 94-95% of revenue, while exports to 54 countries (including Nepal, Bangladesh, Middle East, and Southeast Asia) account for 5% to 6% of total revenue as of H1 FY26.

Profitability Margins

PAT margin improved from 7.1% in FY24 to 9.0% in FY25. However, Q2 FY26 PAT margin declined to 6.2% (INR 389 Cr) from 12.4% in the previous year due to commodity price hikes and festive investments.

EBITDA Margin

EBITDA margin was 12.8% in FY25 (INR 3,110 Cr). In Q2 FY26, EBITDA margin compressed to 8.9% (INR 548 Cr) compared to 12.4% in Q2 FY25, a decline of 350 basis points due to rising input costs and promotional intensity.

Capital Expenditure

The company plans to double its total capacity by Fiscal Year 2029, funded entirely through internal accruals. This includes the establishment of a third manufacturing facility in Sri City and ongoing automation/modification of existing plants in Greater Noida and Pune.

Credit Rating & Borrowing

Maintains a 'CRISIL AA+/Stable/A1+' rating. The company operates with nil debt as of March 2025, resulting in negligible borrowing costs and a robust interest coverage ratio of 92.1 times.

⚙️ Operational Drivers

Raw Materials

Key raw materials include steel, copper, aluminum, and plastics (commodities), which collectively represent over 60% of the total cost of materials consumed (INR 14,740.6 Cr in FY25).

Import Sources

Sourced through a mix of local Indian suppliers and imports from South Korea and other Global South regions to support the 55.8% localization rate achieved in Q2 FY26.

Key Suppliers

Not specifically named in documents, but procurement is managed through LG's global supply chain and local Indian vendors for side-by-side refrigerators and compressor production.

Capacity Expansion

Currently operates two plants (Greater Noida and Pune). Planned expansion includes a third facility in Sri City to double capacity by FY29 to meet both domestic and export demand.

Raw Material Costs

Cost of materials consumed was INR 7,803.8 Cr in H1 FY26, representing approximately 62.7% of revenue. Commodity price volatility recently led to a 1.5% to 2% price increase in washing machines and refrigerators.

Manufacturing Efficiency

Focusing on automation and modification of existing lines. Localization of high-value components like compressors and side-by-side refrigerator units is a key efficiency driver.

Logistics & Distribution

Distribution is supported by festive go-to-market initiatives; costs are managed through a nationwide network of distributors and retailers, though specific % of revenue is not disclosed.

📈 Strategic Growth

Expected Growth Rate

13.1%

Growth Strategy

Growth will be driven by the 'LG Essential' lineup for mass-market penetration, scaling the B2B segment (HVAC and information displays), expanding the high-margin AMC (Annual Maintenance Contract) business, and doubling manufacturing capacity by FY29.

Products & Services

Refrigerators (Single door, Front door), Washing Machines (AI-enabled front-load), Air Conditioners (Room and Commercial), Televisions (OLED, QNED, Signage), Microwave Ovens, Water Purifiers, and Air Purifiers.

Brand Portfolio

LG, LG Essential, QNED, OLED, LG ThinQ.

New Products/Services

Launched 'LG Essential' for first-time buyers and AI-enabled front-load washing machines; new product categories are expected to optimize fixed costs through economies of scale.

Market Expansion

Targeting underpenetrated regional markets in India with the Essential series and expanding exports to 54 countries from the upcoming Sri City plant.

Market Share & Ranking

Market leader in washing machines and refrigerators; increased refrigerator market share by 1% and AC market share by 0.5% YTD September 2025.

Strategic Alliances

Operates as a wholly-owned subsidiary of LG Electronics Inc. (South Korea), leveraging global R&D and export strategies under the 'Global South' initiative.

🌍 External Factors

Industry Trends

The industry is shifting toward premiumization (OLED/Large screens) and energy efficiency. LG is positioning itself by expanding its premium portfolio and B2B HVAC solutions to capitalize on India's infrastructure growth.

Competitive Landscape

Faces intense competition from Samsung, Sony India, and domestic players like Voltas Ltd, particularly in the AC and panel TV segments.

Competitive Moat

Moat is built on brand strength, a 54x oversubscribed IPO reflecting deep trust, and a dominant market position in core categories. Sustainability is driven by a shift toward recurring revenue (AMC) and B2B segments.

Macro Economic Sensitivity

Highly sensitive to consumer sentiment and GST rate changes; Q2 FY26 demand was temporarily deferred ahead of the September 22 GST implementation.

Consumer Behavior

Shift toward larger screen sizes in TVs and smart, AI-enabled appliances; 'aspirational' first-time buyers are a growing segment targeted by the Essential series.

Geopolitical Risks

Regional tensions and global trade developments impact the export strategy and commodity pricing, though the company claims minimal impact compared to competitors.

⚖️ Regulatory & Governance

Industry Regulations

Subject to Bureau of Energy Efficiency (BEE) star rating norms and E-Waste (Management) Rules. GST rate realignment in September 2025 impacted short-term revenue recognition.

Environmental Compliance

ESG and recycling costs are rising as the government-mandated recycling target increases from 60% in FY25 to 70% in FY26.

Taxation Policy Impact

Effective tax rate was approximately 25.6% in FY25 (INR 760 Cr tax on INR 2,963 Cr PBT).

Legal Contingencies

Not specifically detailed in the documents, though the company complies with SEBI and Depository (Regulation 74(5)) requirements for its listed securities.

⚠️ Risk Analysis

Key Uncertainties

Volatility in commodity prices and forex rates are primary risks, with a potential impact of 200-300 basis points on operating margins if not mitigated by price hikes.

Geographic Concentration Risk

Heavy concentration in the Indian domestic market (94-95% of revenue), making it vulnerable to local regulatory and macroeconomic shifts.

Third Party Dependencies

Dependency on global parent for certain high-tech components, though localization is increasing to 55.8%.

Technology Obsolescence Risk

Risk of rapid shifts in smart home technology; mitigated by continuous launches of AI-enabled and QNED/OLED products.

Credit & Counterparty Risk

Superior liquidity with INR 4,284 Cr in cash as of September 2025; trade receivables are managed within a healthy working capital cycle of INR 220 Cr.