LGEINDIA

Navigates Margin Pressure with Strategic Capex and Premium Push

Q2FY26 revenue grew just 1% YoY, reflecting subdued consumer durables demand. Operating margins contracted 350 bps due to elevated commodity costs and festive-season marketing investments. Despite being its first earnings post-listing, the results highlight macro pressures across the sector. Revenue in the Home Appliances & Air Solutions segment remained flat, with cooling products underperforming. LG retained leadership in washing machines (33.4% share) and gained 100 bps in refrigerators (29.9% YTD). Premium offerings like side-by-side refrigerators (43.2% share) and AI-enabled washing machines are gaining traction. EBIT margin fell 400 bps, prompting selective price hikes of 1.5–2% to offset cost pressures. Revenue rose 3% YoY, driven by festive demand for TVs, especially in the premium segment. LG’s OLED market share rose to 62.6%, up 4.2% YoY. However, the information display business remains under pressure due to US tariffs and geopolitical disruptions. EBIT margin declined 180 bps due to commodity costs and promotional spending. - Strategic Capex to Double Capacity by FY29 LG is investing ₹5,000 crore in a new Shree City plant—its largest expansion in a decade. The facility will roll out in phases starting FY26 and aims to double manufacturing capacity by FY29. Fully funded via internal accruals, the project will also raise localisation from 55% to 70%, improving margins and asset efficiency. Exports contributed ~6% of FY25 revenue, mainly from Asia and Africa. LG aims to lift this to ~10% in three years. It’s also expanding its B2B portfolio, leveraging India’s infrastructure growth to drive commercial sales. With festive momentum, premium product strength, and capex-led scale-up, LG India is positioned for sustained double-digit growth. At 43x FY27 earnings, the stock offers long-term compounding potential despite near-term margin headwinds.