LG Electronics India Q1 FY27 earnings call

LG Electronics India Limited delivered a strong Q1 FY27 performance, with revenue from operations growing 15.5% year-on-year to ₹72.33 billion. This growth was broad-based, with all major categories achieving double-digit growth. EBITDA expanded by 26.2% to ₹9.04 billion, resulting in a margin of 12.5%, an improvement of 110 basis points year-on-year. Net profit for the quarter stood at ₹6.53 billion, marking a 27.2% growth year-on-year, with a PAT margin of 8.9%.

The Home Appliance and Air Solution segment reported revenue of ₹55.77 billion, a growth of 13.6%. This segment's EBIT grew by approximately 13.8% year-on-year, maintaining a healthy margin of 11.5%. Growth was driven by premium products like French door refrigerators and 8kg+ washing machines, as well as the Essential series, which sold over half a million units between January and June. The company's two-track strategy of catering to both premium and entry-level segments is proving successful.

The Home Entertainment segment demonstrated exceptional growth, with revenue increasing by 22.3% to ₹16.57 billion. EBIT for this segment surged by 48.5% year-on-year, leading to a robust margin of 19%. This performance was attributed to strong consumer preference for larger screens and premium technologies like OLED and QNED, coupled with timely product launches. The Information Display business also contributed significantly, achieving a 36% market share in its category.

LG Electronics India achieved its highest-ever quarterly export performance, with a 30% growth in Q1 FY27. The company's global footprint has expanded to 65 countries, up from 45-47 countries at the time of its IPO. Exports are margin accretive compared to domestic sales, contributing significantly to overall profitability. The Sri City plant is expected to further boost export capacity, enabling expansion into new geographies and product categories, including premium and Essential series.

The company's 'Make in India' strategy is progressing well, with the Sri City manufacturing plant on track. Compressor production commenced in Q3 FY27, and room air conditioner production is slated for Q4 FY27. The localization rate for the last fiscal year was 55.2%, with a target to reach 65% in the next 3-4 years. This focus on localization helps minimize the impact of raw material price volatility and currency depreciation, acting as a natural hedge.

LG Electronics India deployed ₹5.88 billion of its total Q1 capex of ₹7.36 billion at the Sri City plant. The total outlay for the Sri City plant is ₹50 billion over the next few years. This significant investment is being entirely funded through internal accruals, with the company maintaining a cash and bank balance of ₹57.07 billion. This strategy ensures financial prudence and avoids external borrowings, supporting long-term growth priorities.

The B2B business delivered strong growth in Q1 FY27, particularly in HVAC and information display panels. The company achieved a 36% market share in information display panels, creating a 5% gap with the second-largest player. LG is confident of maintaining a 20% CAGR growth trajectory in its B2B segment, building on its performance from FY22-25. New initiatives include expanding distribution for single CAC cassette units and enhancing product portfolios.