LG Electronics shares jump 8% to 52-week high after Q2 results. Jefferies retains Buy, retains target price

Shares of LG Electronics India surged 8.5% to hit a fresh 52-week high of Rs 1,836 apiece on the NSE on Thursday, following a strong set of September-quarter results. The buoyant sentiment was further supported by a bullish outlook from global brokerage Jefferies, which reiterated its ‘Buy’ rating on the stock and retained its target price at Rs 1,950.

LG Electronics reported a 27% year-on-year (YoY) increase in net profit to Rs 489 crore for Q2FY27, up from Rs 389 crore in the corresponding quarter last year. Revenue from operations rose 19.5% YoY to Rs 7,380 crore from Rs 6,174 crore in Q2FY26.

In a post-results note, Jefferies analysts Sonali Salgaonkar and Saurabh Kulkarni described the September quarter as a "strong quarter", highlighting healthy growth across product categories, improving operating margins and the company's planned entry into the vehicle solutions business.


The brokerage noted that sales and profit after tax (PAT) grew around 20% and 26%, respectively, during the quarter, while operating profit margin (OPM) expanded 60 basis points (bps) YoY, aided by premiumisation and price hikes.

Jefferies said both mass-market and premium product categories delivered healthy growth. It also highlighted recent product launches, including chest freezers and French-door refrigerators, as part of the company's efforts to strengthen its portfolio.

Jefferies sees 21% EPS CAGR over FY26-29

Maintaining its positive stance, Jefferies retained its earnings estimates for FY27-29 and rolled over its target price to Rs 1,950. The brokerage expects LG Electronics to deliver a 21% compound annual growth rate (CAGR) in earnings per share (EPS) over FY26-29, supported by premiumisation and improved capacity utilisation as new manufacturing facilities ramp up.

It expects the home appliances and cooling solutions division to clock a revenue CAGR of 14% over FY26-29, while the home entertainment business is projected to grow at 11%. Overall, sales and PAT are estimated to grow at CAGRs of 13% and 21%, respectively, over the same period.

Jefferies has retained its target price based on a price-to-earnings (PE) multiple of 46 times, around 5% above the company's historical average. The brokerage continues to rate LG Electronics a ‘Buy’ and has named it a top pick.

Vehicle solutions business to provide a new growth avenue

A key development highlighted by the brokerage is LG Electronics India's planned entry into the business-to-business (B2B) vehicle solutions segment, including in-vehicle infotainment (IVI). The new business will leverage the technological capabilities of its South Korean parent and is expected to cover in-vehicle displays, head units, digital cockpits, telematics, connectivity and vehicle computing solutions.

Manufacturing for the new business is planned at the company's third facility in Sri City, South India. The facility is expected to begin operations in Q3FY27, initially with compressor manufacturing.

Jefferies believes the expansion into new capacities, alongside export opportunities and the B2B business, could provide additional growth drivers over the medium term. The brokerage also noted that exports remain an important growth opportunity, while the company's new business segments currently account for less than 10% of sales.

ALSO READ: LG Electronics India Q2 Results: Net profit jumps 27% YoY to Rs 489 crore

Home appliances and entertainment businesses maintain growth momentum

The home appliances segment, which contributed around 65% of Q2FY27 revenue, recorded its highest quarterly sales since listing at Rs 4,800 crore, marking 21% YoY growth. Double-digit growth was reported across key categories, including washing machines, refrigerators and room air conditioners, while dishwashers also delivered strong growth.

The segment's EBIT margin improved 50 bps YoY to 8.7%, despite elevated input costs.

The home entertainment division, accounting for around 35% of revenue, reported sales of Rs 2,600 crore, up 17% YoY. Growth was driven by television sales as consumers increasingly upgraded to larger screens. LG Electronics also recorded an all-time high offline market share in the category, further strengthening its leadership position.

This marked the third consecutive quarter of double-digit growth for the segment. EBIT margin expanded 30 bps YoY to 12.9%, with operating leverage helping offset higher panel costs, currency-related import pressures and incremental festive promotional spending.

Premiumisation, capacity expansion key to growth outlook

The brokerage expects premiumisation, a wider product portfolio and improving utilisation at new manufacturing facilities to support earnings growth. LG Electronics is also benefiting from a strong distribution network of more than 36,400 B2C touchpoints and an established domestic supply chain, with over 50% of raw materials sourced locally.

The company is managing currency and commodity-related volatility through localisation, calibrated price increases and operational efficiencies. Jefferies also pointed to positive industry sentiment ahead of the peak festive and wedding season, with energy-efficient air conditioners and an expanded television portfolio supporting demand.

The brokerage estimates annual capital expenditure of Rs 1,200-1,500 crore over FY26-29, largely towards the Sri City facility. Despite the planned investments, return on capital employed (RoCE) is estimated to remain at 30-33%, while return on equity (RoE) is expected at 24-25% over the period.

What are the risks to Jefferies' bullish outlook?

While Jefferies remains positive on LG Electronics, it flagged a slowdown in consumer demand, delays in commissioning the Sri City plant, market-share losses and volatility in raw material prices and the rupee as key risks.

In its upside scenario, the brokerage sees the stock reaching Rs 2,100, implying a potential upside of 24%. This scenario is supported by market-share gains, higher in-house production, premiumisation, stronger exports and a faster ramp-up in B2B operations.

In its downside scenario, the target price stands at Rs 1,300, implying a potential downside of 23%, amid weaker consumer spending, adverse weather conditions affecting room air-conditioner sales, delays in capacity expansion and increased competitive pressure.

Disclosure: This article has been written by Kumar Gaurav, who is not a Sebi-registered Research Analyst or an Investment Adviser. Gaurav and their ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective Sebi-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here