LG Electronics India Limited — Q2 FY26 earnings call

Call held 14 Nov 2025

Management summary

LG Electronics India Limited reported a resilient Q2 FY26 with INR 61.74 billion in revenue, up 1.0% YoY, despite external headwinds and temporary GST-related purchase deferrals. The company maintained market leadership and gained share in key categories, supported by its recent successful IPO. However, EBITDA margin compressed to 8.9% from 12.4% YoY due to rising commodity prices and increased festive investments. Looking ahead, LG is focused on expanding its manufacturing footprint with a new INR 5,000 crore Sri City facility, increasing localization to 70%, and growing its B2B segment to drive sustainable, profitable growth.

Highlights

  • Successful IPO with 54x subscription, highest since 2008, reinforcing India-rooted identity.

  • Revenue from operations grew 1.0% YoY to INR 61.74 billion in Q2 FY26, demonstrating resilient performance despite headwinds.

  • Maintained market leadership and gained share across key product categories, including refrigerators (+1%), RAC (+0.5%), and OLED TVs (+4.2%).

  • Commenced construction of a new INR 5,000 crore manufacturing facility in Sri City, Andhra Pradesh, to boost production capacity and exports.

  • Localization rate increased to 55.8% in Q2 FY26, with a strategic target of 70% in the next 3-4 years to improve margins.

Concerns

  • Muted momentum in the consumer durable sector due to external headwinds like cool summer, early monsoon, currency volatility, and geopolitical tensions.

  • EBITDA margin compressed to 8.9% in Q2 FY26 from 12.4% in Q2 FY25, impacted by rising commodity prices and incremental festive investments.

  • Temporary deferral of consumer purchases in Q2 due to the GST rate cut announcement on August 15 and its implementation on September 22.

  • Information display business (B2B) was impacted by U.S. tariffs and geopolitical issues, leading to lower infrastructure spending.

Key financials

  1. Revenue from Operations ₹6,174 Cr +1%YoY
  2. EBITDA ₹548 Cr
  3. EBITDA Margin 8.9%
  4. Net Profit ₹389 Cr
  5. Net Profit Margin 6.2%
  6. Cash and Bank Balance ₹4,280 Cr

What they filed

Q1 FY27: revenue up 15.5%, net profit up 27.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue6,114 4,396 7,448 6,263 6,174 +1%4,114 −6%8,054 +8%7,233 +15%
EBITDA757 340 1,048 716 548 −28%196 −42%945 −10%904 +26%
Net profit536 233 755 513 389 −27%90 −61%693 −8%653 +27%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Revenue from Operations
₹6,208 Cr Total
  • Home Appliance and Air Solution ₹3,948 Cr 63.6%
  • Home Entertainment ₹2,260 Cr 36.4%

Capital allocation

high confidence
  • Capex ₹1,000 Cr this quarter · ₹5,000 Cr (next 4-5 years) planned internal accruals
    • New manufacturing facility in Sri City for RAC, compressors, refrigerator, and warehouse ₹5,000 Cr
    • Automation and modification for two existing plants
    A key example is our upcoming manufacturing facility at Sri City, Andhra Pradesh, which is poised to become a strategic asset for both domestic operations and export market... We have a planned investment of approximately INR 5,000 crore, which will be funded through our internal accruals deployed in a phased manner over the next four to five years. (Page 7) ...we would be doing a phased manner investment. Almost, you can say, I will tell you around INR 1,000 to INR 1,200 crore per year. (Page 22) ...we continue to invest for our two existing plants as well for the automation and modification. (Page 15)
  • Liquidity Cash ₹4,280 Cr Cash and bank balance as of 30th September 2025 remains healthy.
    Our cash and bank balance as of 30th September 2025 remains healthy at INR 42.8 billion. (Page 7)

Guidance & targets

Revenue

  • Revenue CAGR Revenue · since 2022 · High confidence 13.1%
    Revenue CAGR since 2022 stands at 13.1% with double-digit EBITDA.

    — Dongmyung Seo

Localization

  • Localization Rate Localization · next 3-4 years · High confidence 70%

    From 55.8% today

    So, our current localization rate is around 55.8%, and in the last three fiscal years, we improved it 2% to 3% every year. And our target is to continue this 2% to 3% localization further in the next coming three to four years, and we want to take it to around 70%.

    — Sanjay Chitkara

Manufacturing

  • Sri City RAC Plant Operationalization Manufacturing · FY27 · High confidence October 2026
    The first product line of operations will be room air conditioners, which will be operational by October 2026

    — Atul Khanna

  • Sri City Aircon Compressor Line Operationalization Manufacturing · FY27 · High confidence Q4 FY27
    followed by aircon compressor line in Quarter 4 of Fiscal Year '27.

    — Atul Khanna

  • Sri City Plant Fully Operational Manufacturing · FY29 · High confidence doubling capacity
    doubling our capacity as the plant gets fully operational by Fiscal Year '29.

    — Atul Khanna

Capex

  • Capex for Existing Plants Capex · yearly · High confidence 2-2.5% of total revenue
    we normally do CapEx investment in the range of 2% to 2.5% of our total revenue yearly, and we would be continuing for our existing two plants

    — Atul Khanna

Exports

  • Export Contribution to Revenue Exports · future · Medium confidence expand

    From 5-6% today

    Exports to 54 neighboring countries... contribute to 5% to 6% of LGEIL's revenue... LGEIL plans to identify new export destinations from our third manufacturing facility to expand exports of premium products to wider markets.

    — Dongmyung Seo

B2B Business

  • B2B Contribution to Business B2B Business · future · Medium confidence grow

    From 6% today

    Our B2B business is contributing roughly 6% of our business... we will continue this growth momentum.

    — Sanjay Chitkara

Margins

  • Margin Improvement from Localization (FX Impact) Margins · future · Medium confidence 3-4%
    there would be an FX impact of around 3% to 4%, which we would be adding to our margins with a smaller pie as well as sometimes larger pie

    — Atul Khanna

Market context

  • EBITDA Profitability · since 2022 · High confidence double-digit
    Revenue CAGR since 2022 stands at 13.1% with double-digit EBITDA.

    — Dongmyung Seo

What to watch in Q3 FY26

Sri City RAC plant operationalization progress

Next quarter (for updates on progress)
Current Under construction, planned for October 2026 operationalization
Target On track for October 2026 operationalization

Why it matters

This is a key milestone for capacity expansion and the company's export strategy, impacting future revenue and market share.

The first product line of operations will be room air conditioners, which will be operational by October 2026

Risks & concerns

  • Muted consumer demand due to external headwinds

    medium

    Cool summer, early monsoon, currency volatility, geopolitical tensions (Indo-Pak situation) led to cautious consumer sentiment.

    Management acknowledged

  • Margin pressure from rising costs and investments

    medium

    Rising commodity prices, higher recycling costs, and incremental festive go-to-market investments impacted EBITDA margins.

    Management acknowledged

  • Impact on B2B information display business

    medium

    U.S. tariffs and geopolitical issues led to low-infra spending, impacting the information display business, though management expects momentum to return.

    Management acknowledged

  • Temporary demand deferral due to GST rate changes

    low

    GST rate cut announcement on Aug 15 and implementation on Sep 22 caused temporary deferral of purchases, but demand is normalizing.

    Management acknowledged

Q&A highlights

7 direct, 1 evasive
Impact of Forex, GTM investments, and recycling costs on margins in H1 FY26 and outlook for H2. Direct
So, gentlemen, during this quarter, if you see that margins came under the pressure because of some external factors, which was where we have absorbed the cost of go-to-market initiatives and consumer promotions to support our partners, to build a momentum in the market for our trade partners as well as the consumers, with a neutral revenue growth also, which limits us to absorb our fixed cost as well. Whereas the global headwinds of FX devaluation, rising commodity prices, which has impacted particularly the margins, and recycling costs also given a tough time this time, as our target for Fiscal Year '26 becomes 70% as per the government regulations, whereas last year, Fiscal Year '25, it was 60%.

Management explained the specific factors contributing to margin pressure in H1 FY26 and outlined strategies like localization and operational efficiencies for future improvement.

Asked by Sanjeev Kumar Singh

Outlook for margin improvement in the near term (Q3/Q4 FY26). Evasive
Please understand that I will not be able to open specific figures in today's event. What LGEIL remains focused on is our long-term strategy. Revenue CAGR since 2022 stands at 13.1% with double-digit EBITDA.

Management declined to provide specific numerical guidance for near-term margin recovery, emphasizing long-term strategic goals instead.

Asked by Sanjeev Kumar Singh

Rollout plan, market response, and price positioning of the new LG Essential series. Direct
So, our Essential series is built on an insight which we have taken from 1,200 households in India... So, we introduced a few SKUs during last month, during Diwali month... These prices, we have very aggressively priced these products, and we have given a very compelling reason to entry-level customers to upgrade their first purchase... prices are in the lower than INR 20,000 prices. The washing machine is priced roughly around INR 16,000, between INR 16,000 to INR 18,000, and refrigerator also in the range of INR 20,000.

Provides concrete details on the new product line targeting first-time buyers, its strategic pricing, and initial market reception.

Asked by Sanjeev Kumar Singh

LG Electronics India's current export status, future strategy, and export contribution as a percentage of net sales in H1 FY26. Direct
Exports to 54 neighboring countries, including Nepal, Bangladesh, the Middle East, and Southeast Asia, contribute to 5% to 6% of LGEIL's revenue... on first half of Fiscal Year '26, our exports contribution, it reached to almost 7%, whereas last year, full year, Fiscal Year '25, we were at almost 6%.

Clarifies the current export scale and the strategic importance of expanding exports, particularly from the new Sri City facility, for global growth.

Asked by Aniruddha Joshi

Details on the new Sri City plant, including timelines, product lines, fiscal benefits, and advantages for Go-To-Market (GTM) in South India. Direct
We are driving our third factory plant at Sri City with a total investment outlay of INR 5,000 crore to be deployed in a phased manner over the next few years, four to five years... The first product line of operations will be room air conditioners, which will be operational by October 2026, followed by aircon compressor line in Quarter 4 of Fiscal Year '27. Thereafter, washing machine and refrigerator line will begin in a phased manner... doubling our capacity as the plant gets fully operational by Fiscal Year '29.

Offers critical insights into the company's significant capacity expansion project, its phased rollout, and the strategic benefits for domestic and export markets.

Asked by Aniruddha Joshi

Localization target and potential margin improvement from this initiative. Direct
So, our current localization rate is around 55.8%, and in the last three fiscal years, we improved it 2% to 3% every year. And our target is to continue this 2% to 3% localization further in the next coming three to four years, and we want to take it to around 70%... there would be an FX impact of around 3% to 4%, which we would be adding to our margins.

Details the company's aggressive localization roadmap and quantifies the expected positive impact on margins by mitigating currency and duty costs.

Asked by Dhruv Jain

Revenue growth, impact of GST changes, confidence in achieving double-digit growth in H2, and current demand/inventory levels. Direct
the biggest challenge which we faced for Q2 is the GST cut was announced on 15th of August, but implemented on 22nd of September, which led to the deferment of the purchases by our partners and customers... The toughest phase of transition of GST is now behind us. GST has been fully implemented. Partners' inventories are getting normalized... we have taken a price increase, as I mentioned, 1.5% to 2% for washing machine and refrigerator case. We have also rationalized the promotional intensity.

Explains the Q2 revenue impact from GST, confirms market normalization, and outlines strategic actions (price hikes, rationalized promotions) to drive H2 performance and margin recovery.

Asked by Latika Chopra

Scope for further market share gains, especially in categories where LG already holds a high or leadership position. Direct
So, I am a sales leader for LG Electronics, and it is my day-and-night endeavor to improve the market share of the company. So, there is no limit... our OLED market shares are touching 62%... microwave market share, it is 45.4%... Washing machine also, 33.4%... when the market share comes for the premium product, LG's market shares are very, very high, and it is in the range of 40%.

Reaffirms the company's commitment to continuous market share expansion, highlights strong positions in premium segments, and links premiumization to overall market share and profit improvement.

Asked by Praveen Sahay

3 min read 7 chapters

Detailed narrative

IPO Success and India-rooted Identity

LG Electronics India Limited (LGEIL) celebrated a major milestone with its successful initial public offering, receiving bids worth INR 4.4 lakh crore and achieving 54x subscription, the highest in India's IPO market since 2008. This strong participation from local shareholders reinforces the company's identity as an India-rooted and national corporation. The IPO was not just a financial event but a moment of pride, reflecting deep trust placed in the company.

Strategic Vision: 'Make for India, Make in India, Make India Global'

LGEIL's long-term strategic direction is centered on 'Make for India,' 'Make in India,' and 'Make India Global.' The 'Make for India' initiative focuses on creating products tailored for Indian lifestyles, exemplified by the newly launched LG Essentials series for aspirational and first-time buyers. 'Make in India' involves expanding manufacturing footprint, while 'Make India Global' leverages India's productivity for LG's Global South strategy, with exports contributing 5-6% of revenue in H1 FY26, up from 6% in FY25.

Q2 FY26 Financial Performance Overview

In Q2 FY26, LGEIL delivered a resilient performance with revenue from operations of INR 61.74 billion, marking a 1.0% year-on-year growth over INR 61.14 billion in Q2 FY25. However, EBITDA for the quarter was INR 5.48 billion, with a margin of 8.9%, down from 12.4% in Q2 FY25. This margin impact was attributed to rising commodity prices and incremental investments in festive go-to-market initiatives, alongside temporary deferrals of purchases due to GST rate cut timing. Net profit stood at INR 3.89 billion with a 6.2% margin.

Segmental Performance and Market Share Gains

The Home Appliance and Air Solution segment reported INR 39.48 billion in revenue, with an EBIT margin of 8.2%. The Home Entertainment segment recorded INR 22.6 billion in revenue, a 3% YoY increase, with an EBIT margin of 12.6%. Despite challenging conditions, LGEIL improved its market share, maintaining leadership in washing machines (33.4%), refrigerators (29.9%, +1% YoY), RAC (17.4%, +0.5% YoY), and premium OLED TVs (62.6%, +4.2% YoY). The company's brand strength is at its peak, creating significant gaps with competitors.

Manufacturing Expansion: Sri City Facility

LGEIL is expanding its manufacturing footprint with a third factory in Sri City, Andhra Pradesh, involving a total investment of INR 5,000 crore over four to five years, funded by internal accruals at INR 1,000-1,200 crore annually. The facility will significantly boost production capacity, improve logistics, and strengthen the supply chain. Room air conditioners are expected to be operational by October 2026, followed by the aircon compressor line in Q4 FY27, with the plant fully operational by FY29, doubling capacity.

Localization and Margin Improvement Initiatives

The company's localization rate increased to 55.8% in Q2 FY26, with a target to reach 70% in the next three to four years by localizing glass items, resins, raw materials, and in-house production of compressors and sub-assemblies. This effort is expected to improve margins by mitigating FX impacts (estimated 3-4%) and duties. Post-GST rate cut normalization, LGEIL implemented price increases of 1.5-2% for washing machines and refrigerators and rationalized promotional intensity to support margin recovery.

B2B Business and New Revenue Streams

The B2B business currently contributes roughly 6% of total sales, primarily driven by HVAC and information display panels. While this segment faced pressure from U.S. tariffs and geopolitical issues, leading to low-infra spending, management expects momentum to return as micro conditions stabilize. LGEIL is also focusing on additional revenue sources like Annual Maintenance Contracts (AMC) and tapping into the data center cooling market, leveraging India's IT capabilities, which offer high growth potential and better margins.

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