Ahead of IPO, LG India banks on domestic demand, premium portfolio and export hub ambition

LG Electronics Inc. will raise ₹11,607 crore by selling 101.8 million shares through an offer for sale (OFS). The initial public offering (IPO), scheduled for 7-9 October, will see the South Korean parent firm sell about 15% of its stake in its Indian arm. Since no new equity will be issued, the subsidiary will not receive any funds from the offering.

Sanjay Chitkara, chief sales officer, LG Electronics India, said the listing is “not just a financial event" but an opportunity to tell the company’s “India growth story" and prepare for the future. “This IPO is coupled with other activities. Currently, we operate two manufacturing units, one in Noida and another in Pune. We are also investing $600 million in a third plant and doubling our capacity. We are scaling our manufacturing and investing in technology. We want to increase access to premium products among the masses and will invest in that. The new plant will also be in preparation for future exports," Chitkara told Mint on Wednesday.

LG Electronics India was incorporated on 20 January 1997 as a wholly-owned subsidiary of LG Electronics Inc. Its Noida and Pune units together contributed more than 85% of sales in recent fiscal years, according to IPO disclosures by Axis Capital.

A third unit for producing AC compressors, refrigerators, washing machines and air conditioners is being set up at Sri City, Andhra Pradesh, with an investment of $600 million ( ₹5,001 crore) over four years. Operations are expected to start by 2026.

Boosting exports

The Andhra Pradesh plant is also expected to boost exports, a key growth driver for the company. Currently, exports account for about 6% of LG India’s business, and largely comprise mid-segment refrigerators and washing machines that are shipped to markets in Asia, Africa, and the Middle East. With the recent addition of premium production lines such as side-by-side refrigerators and OLED TVs, LG expects to export to more markets and achieve economies of scale.

Demand for LG appliances is growing worldwide and the company “wants to position India in a global production pool", said Atul Khanna, chief accounting officer, LG Electronics India. “We are an integral part of our parents' Global South strategy, through which it wants to establish India as a global production hub," he added.

Chitkara said, “Exports from India generated $160 million or roughly 6% of our revenue in FY25, during which we grew our exports by 45%. We are exporting refrigerators, refrigerator compressors and washing machines. Recently we started manufacturing premium products in India such as side-by-side refrigerators. Earlier we were restricted to single- and double-door refrigerators.

“Demand for premium products is much higher in developed countries. Starting to manufacture premium products [in India] will also bring in economies of scale for domestic consumption, especially for premium products, as it will reduce the fixed-cost burden on these products and make them more affordable to Indian consumers."

Premium market leader

LG leads the Indian consumer durables market across refrigerators, washing machines, air conditioners, microwaves and televisions. It competes with Samsung, Haier, Daikin, Voltas and others. Premium products accounted for 17% of India’s home appliances market as of FY25, and this is expected to rise to 25-27% by FY26, according to company executives.

LG’s share of the premium market is nearly twice the sector’s average. For instance, LG holds 62% of the OLED TV market and has a 44% market share in side-by-side refrigerators.

In FY25 the company’s revenue rose 14% year-on-year (y-o-y) to ₹24,366.64 crore. Profit stood at ₹2,203.35 crore, up 45% on-year. LG’s portfolio includes televisions and monitors, refrigerators, washing machines, air conditioners, microwave ovens, water purifiers, compressors and ceiling fans. Penetration of home appliances in India remains low—only 4% of households own a microwave, 11% an air-conditioner, and 21% a washing machine, compared to 80-90% in developed markets.

On future fundraising plans, Khanna said, “Sebi (Securities and Exchange Board of India) gives the leverage of time. Earlier it was three years but with the valuation we are coming in with it would be five years. We have to comply with all Sebi guidelines. We'll look for the right time and look at more investments as and when required, in line with Sebi guidelines. We are a cash-rich company; and the new plant in Andhra Pradesh is being funded through internal accruals. We are also debt-free," he said.

Under Sebi’s revised guidelines, LG Electronics India has five years to ensure a minimum public shareholding of 25%.

Bullish on domestic demand

Meanwhile, the company remains bullish on domestic consumption. India’s consumer durables and electronics market is valued at $70 billion and expected to expand to $100 billion by FY30 at a compound annual growth rate (CAGR) of 7%, according to Deloitte. By FY27, India is expected to become the world’s fourth-largest market for consumer electronics.

The market could receive a significant boost from income tax cuts announced in the Budget and the recent goods and services tax (GST) cuts in which the tax on big-ticket electronics was reduced from 28% to 18%, causing manufacturers to cut prices of air-conditioners, large televisions, monitors, projectors and dishwashers.

Chitkara said, “GST cuts will increase the affordability of our products. We have broken all previous records in the first nine days of Navratri. GST cuts will help us shift consumers towards premium products within their budget."