The overhang of a massive OFS could investor enthusiasm, as seen in Hyundai India’s listing, which disappointed despite strong subscription. However, LG seems to have dangled a carrot — opting for a reasonable valuation and a stronger domestic pitch to attract investors.
The IPO, opening on October 7 and closing on October 9, is priced between Rs 1,080 and Rs 1,140 per share, valuing the company between Rs 73,000 crore and Rs 77,000 crore, which is way lower than the company’s previously planned Rs 1.3 lakh crore.
A homegrown success story, with strong parent backing
LG Electronics India is the Indian arm of South Korea’s LG Electronics — a global leader in consumer electronics. Over 28 years in India, it has become a dominant force across product categories, leading in washing machines (33.5%), refrigerators (29.9%), panel TVs (27.5%), air conditioners (20.6%), and microwaves (51.4%) as of H1CY25.
Offline retail remains its stronghold, accounting for 77% of its domestic sales. LG caters to both B2C and B2B customers under two major verticals — home appliances and air solutions (75% of revenue) and home entertainment (25%) — and supplements its product lines with installation, servicing, and maintenance offerings.
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Its manufacturing backbone spans Noida and Pune, with a total installed capacity of 1.45 crore products annually. The company employs 13,368 engineers and operates over 1,000 service centres, forming one of the most extensive consumer electronics networks in India.
Valuation: A sensible price tag
According to SBI Securities, LG outshines closest peers in most valuation parameters with superior return profile. The brokerage notes that LG’s FY23–FY25 revenue, EBITDA, and PAT CAGR stand at 10.8%, 28.0%, and 27.8%, respectively, showcase both resilience and scalability.
At the upper end of the price band, LG’s P/E multiple stands at 35.1x on post-issue basis, which analysts call fairly valued given its market leadership, robust growth, and capital-efficient business.
India’s home appliances and consumer electronics market is expected to touch Rs 10.9 lakh crore by 2029, led by a rising middle class and urban demand. Meanwhile, LG’s planned expansion into HVAC systems, LED solutions, and electronic blackboards will position it strongly in the B2B segment, which itself is expected to grow at a 14% CAGR over the next five years.
The overhang vs opportunity
The challenge for LG lies in overcoming investor skepticism surrounding large OFS-based issues. Unlike fresh issues where proceeds fund growth or debt reduction, an OFS merely allows existing shareholders to exit.
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However, analysts said LG appears to be countering this perception through two levers — pricing discipline and visible reinvestment by its parent in Indian manufacturing. The Korean parent’s $600 million factory expansion and capacity enhancement plans signal a commitment to the India growth story, even as it monetizes a portion of its stake.
“Moreover, LG’s operational scale, domestic dominance, and diversification into high-margin B2B segments could ensure that investors don’t view it purely as a cash-out play.”
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
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