Post by : Rameen Ariff

LG Electronics India is all set to launch its initial public offering (IPO), becoming the second South Korean company to list in India after Hyundai. This move aims to tap into the growing investor interest in India, the world’s third-largest stock market.

IPO Size and Structure

The IPO, valued at ₹11,607 crore, is a pure offer for sale by LG’s Korean parent company. No new shares are being issued, meaning the company will not raise fresh capital. About 10.18 crore shares, representing 15% of the parent’s stake in LG India, will be sold, reducing the parent’s shareholding to around 85% post-listing. The IPO is managed by a consortium of top bankers, including Kotak Mahindra Capital, Morgan Stanley India, and JM Financial.

Price Band and Valuation

The price band has been set between ₹1,080 and ₹1,140 per share, valuing LG Electronics India at roughly ₹77,400–80,000 crore ($8.7 billion). At the upper range, the IPO trades at a P/E multiple of 47 times FY24 earnings, slightly higher than peers like Voltas, Havells, and Blue Star.

Anchor Investors

Before the public issue, LG India raised ₹3,475 crore from anchor investors, selling 3.04 crore shares at ₹1,140 each. Global and domestic institutions including Goldman Sachs, BlackRock, Abu Dhabi Investment Authority, SBI Mutual Fund, and HDFC Mutual Fund participated, signaling strong confidence in the IPO.

Key Dates and Allotment

• IPO opens: 7 October 2025

• IPO closes: 9 October 2025

• Basis of allotment: 10 October 2025

• Listing on BSE/NSE: Around 14 October 2025

Investors can bid for a minimum of 13 shares per lot, translating to an investment of about ₹14,820 at the upper price band.

Issue Allocation

• Qualified Institutional Buyers (QIBs): 50%

• Retail Investors: 35%

• Non-Institutional Investors: 15%

Given LG India’s strong market position and financials, demand is expected to be robust across all categories.

Company Overview and Performance

LG Electronics India is a leading consumer electronics and home appliance brand, competing with Samsung, Whirlpool, Godrej, and Voltas. It commands a significant market share in washing machines, refrigerators, air conditioners, and TVs.

The company operates manufacturing facilities in Noida and Pune, along with a widespread sales and service network. In FY24, LG India reported a revenue of ₹26,782 crore and net profit of ₹1,710 crore, with a 3-year CAGR of about 10%. Plans for a $600 million new facility at Sri City, Andhra Pradesh, aim to boost domestic sales and exports.

Financials and Margins

LG India maintains operating margins of 9–10% and a return on equity of 22.6%. With minimal debt and strong cash flow, the company demonstrates consistent profitability. However, analysts note risks from import dependency, royalty payments, and currency fluctuations.

Risks to Consider

• High import dependence: 46% of raw materials sourced from abroad

• Royalty payments: 2.4% of sales to Korean parent

• Tax dispute: ₹4,717 crore demand from Indian authorities

• Competition: Intense pricing pressure from multinational and Indian brands

Grey Market Premium (GMP)

The LG India IPO is trading at a GMP of ₹250–270 per share, indicating potential listing gains of 22–25%. Brokerages like Angel One, Motilal Oswal, and Ventura Securities recommend subscribing, citing LG’s brand strength, profitability, and long-term growth.

Strategic Outlook

The IPO gives LG India public visibility and valuation, strengthens governance, local manufacturing, and the Make in India initiative, and highlights investor interest in consumer durables amid rising household incomes. A successful listing may encourage other multinationals like Samsung and Whirlpool to follow suit.

For investors, LG Electronics India’s IPO offers a chance to invest in a trusted consumer electronics brand. While the issue is fully priced, the company’s strong fundamentals and market presence make it a solid long-term investment opportunity.

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