LG Electronics India Limited — Q3 FY26 earnings call

Call held 12 Feb 2026

Management summary

LG Electronics India reported a challenging Q3 FY26 with revenue and EBITDA declines, primarily due to subdued demand, rising input costs, and external pressures. Despite this, the company maintained market share leadership in key categories and advanced strategic initiatives like localization, export expansion, and new manufacturing facilities. Management expressed confidence in a strong Q4 FY26 rebound and double-digit growth for FY27.

Highlights

  • Market share leadership maintained in washing machines (33%), refrigerators (30%, up 0.5% YoY), AC (17.3%, up 0.4% YoY), and side-by-side refrigerators (43.3%, up 2.9% YoY).

  • Secured an incentive of INR 705 crores from the Government of Maharashtra for mega expansion projects.

  • Entered a 9-year Advance Pricing Agreement with CBDT, eliminating contingent liabilities of nearly INR 4.87 billion related to direct taxes and royalty payments.

  • Localization rate increased from 45.1% in FY22 to 54.6% in Q3 FY26.

  • Aiming to double export value from India in FY27, supported by US tariff rationalization and India-EU FTA.

Concerns

  • Revenue from operations declined to INR 41.14 billion in Q3 FY26 from INR 43.96 billion in Q3 FY25, a 6.41% YoY decrease.

  • EBITDA decreased to INR 1.96 billion in Q3 FY26 from INR 3.4 billion in Q3 FY25, leading to margin compression from 7.7% to 4.8%.

  • Working capital increased to INR 11.3 billion as of December 31, 2025, from INR 8.1 billion a year prior, primarily due to incremental inventory in compressor-led products.

  • Margins impacted by subdued sales, increased input costs (copper, aluminum), currency-related headwinds, new Labour Code, and one-time tax outgo from APA.

Key financials

  1. Revenue from Operations 41.14 Bn -6.4%YoY
  2. EBITDA 1.96 Bn -42.4%YoY
  3. EBITDA Margin 4.8%
  4. Working Capital 11.3 Bn +39.5%YoY
  5. Cash and Bank Balance 45 Bn
  6. Contingent Liabilities Eliminated 4.87 Bn

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
41.14 Bn Total
  • Home Appliance & Air Solution 27.88 Bn 67.8%
  • Home Entertainment 13.26 Bn 32.2%

Capital allocation

high confidence
  • Capex ₹5,000 Cr entirely through internal accruals
    • Manufacturing capability expansion (Sri City plant) ₹5,000 Cr
    • Localization and new technology innovative products
    As disclosed earlier, in line with our long-term growth strategy, we continue to reinvest in our business. A key milestone is the upcoming expansion of our manufacturing capability with INR5,000 crores, investment in our Sri City plant in Andhra Pradesh. This facility is poised to become a strategic asset for both domestic operations and export markets, enhancing production capacity, improving logistics efficiency and supporting our localization roadmap. Importantly, the capex will be funded entirely through internal accruals, deployed in a phased manner over the next 4 to 5 years.
  • Liquidity Cash ₹45 Bn Our cash and bank balance as of 31st December 2025 remains healthy, at INR 45.0 billion.
    Our cash and bank balance as of 31st December 2025 remains healthy, at INR 45.0 billion.

Guidance & targets

Exports

  • Export Value Exports · FY27 · High confidence double

    From $160 million today

    Subject to external factors, we are aiming to doubling our exports from the next financial year, fiscal year '27. We have developed our production capability to manufacture premium products like side-by-side refrigerators, large capacity top freezers, which is 650 litres plus refrigerator, at our Pune manufacturing plant already. And these premium products have already passed the quality standard, usage pattern, and design specs of the U.S. market, which gives benefit to add up the new geographies like U.S. and other developed economies.

    — Atul Khanna

Profitability

  • EBITDA Margin Profitability · Q4 FY26 · High confidence mid-teen digits
    Q4 is historically our largest quarter, and we are confident of deliver double-digit revenue growth and EBITDA margin better than last year's Q4 in mid-teen digits.

    — Aditya Bhasin

  • EBITDA Margin Profitability · FY27 · High confidence early-teen digit
    With all our good initiatives, our guidance is to deliver double-digit revenue growth and sustain early-teen digit margins in line with our FY '25 margin levels, supported by premium product launches, diversified portfolio, strong brand equity.

    — Aditya Bhasin

Revenue

  • Revenue Growth Revenue · FY26 · High confidence early single-digit
    Our overall outlook for FY '26 is to deliver early single-digit revenue growth with EBITDA margin in double-digit.

    — Aditya Bhasin

Incentive Recognition

  • Maharashtra Incentive Recognition Incentive Recognition · FY26 · High confidence INR 43 crores
    So, we would be accounting for almost INR 43 crores rupees in this fiscal year '26 as it is a period from May '25 to 31st March 2026.

    — Atul Khanna

Localization

  • Localization Rate Localization · ongoing · Medium confidence continue to rise

    From 54.6% today

    Localization has already increased from 45.1% in FY '22 to 54.6% in Q3 FY '26, and will continue to rise under the Make in India initiative.

    — Dongmyung Seo

Market context

  • Revenue Growth Revenue · Q4 FY26 · High confidence double-digit
    Q4 is historically our largest quarter, and we are confident of deliver double-digit revenue growth and EBITDA margin better than last year's Q4 in mid-teen digits.

    — Aditya Bhasin

  • EBITDA Margin Profitability · FY26 · High confidence double-digit
    Our overall outlook for FY '26 is to deliver early single-digit revenue growth with EBITDA margin in double-digit.

    — Aditya Bhasin

  • Revenue Growth Revenue · FY27 · High confidence double-digit
    With all our good initiatives, our guidance is to deliver double-digit revenue growth and sustain early-teen digit margins in line with our FY '25 margin levels, supported by premium product launches, diversified portfolio, strong brand equity.

    — Aditya Bhasin

What to watch in Q4 FY26

Q4 FY26 Revenue & EBITDA Margin

Q4 FY26
Current Q3 FY26 Revenue INR 41.14 billion, EBITDA Margin 4.8%
Target Double-digit revenue growth, mid-teen EBITDA margin

Why it matters

Verifies management's confidence in a strong rebound for the largest quarter and its ability to achieve stated profitability targets.

Q4 is historically our largest quarter, and we are confident of deliver double-digit revenue growth and EBITDA margin better than last year's Q4 in mid-teen digits.

Risks & concerns

  • External Pressures (US tariffs, currency fluctuations, geopolitical uncertainties, softening consumer demand)

    high

    The business landscape has been impacted by several external pressures, including US tariffs, sharp currency fluctuations, purchases deferments following the GST announcement, geopolitical uncertainties, and softening consumer demand driven by rising prices.

    Management acknowledged

  • Subdued Sales and Impact on Operating Leverage

    high

    Subdued sales impacting operating leverage and low revenue during the traditionally smallest quarter directly impacted margins.

    Management acknowledged

  • Raw Material Cost Inflation (Copper, Aluminum)

    medium

    There was a price increase in input costs, particularly metals like copper and aluminium, which impacted margins.

    Management acknowledged

  • Currency-related Headwinds

    medium

    Currency-related headwinds and foreign exchange volatility further added pressure on margins.

    Management acknowledged

  • Impact of New Labour Code

    low

    The impact of the new Labour Code contributed to margin pressure.

    Management acknowledged

  • Electronic Waste Compliance Cost

    low

    Compliance cost related to electronic waste added a burden on margins.

    Management acknowledged

Q&A highlights

8 direct
Price Hikes due to Raw Material Costs and New BEE Norms Direct
there would be almost 7 to 8% price increase on three-star Acs and we are increasing prices by 9 to 10% on five-star ACs... for washing machine and refrigerator. It is to the tune of 2% to 3% and that price increase was taken in the month of November.

Provides specific price hike percentages across key product categories (ACs, washing machines, refrigerators) and their timing, which is crucial for understanding revenue and margin impact.

Asked by Umang Mehta

Confidence in Doubling Exports by FY27 Direct
We are very confident about our export business moving forward from fiscal year '27 and onwards given U.S. tariff rationalization the signing of the EU FTA, giving us additional opportunities to add on to our export business... aiming to doubling our exports from the next financial year, fiscal year '27.

Clarifies the company's ambitious export growth target for FY27 and the strategic drivers behind it, including tariff rationalization and trade agreements.

Asked by Umang Mehta

Company Strategy and Growth Catalysts for the Next 2-3 Years Direct
Going forward, growth will be driven by a stronger premium B2C portfolio, while we also broaden our presence in the mass segment through the new LG Essential series... entering new product categories such as chest freezers... B2B front, momentum will come from HVAC and information display solutions... Exports from our third factory will further extend our market reach.

Outlines the multi-pronged growth strategy across B2C, B2B, new product categories, and exports, indicating diversification and future growth areas.

Asked by Sonali Salgaonkar

Specific Cost Items Leading to Margin Compression in Q3 FY26 Direct
Pressure on margins was a temporary phase... Q3 is traditionally the smallest quarter... revenue softness during this period had a direct impact on operating leverage... new wage code basis government regulation change... compliance cost, which is related to electronic waste... RMC cost and FX fluctuation also impacted our margins.

Provides a detailed breakdown of the various factors contributing to the significant margin decline in the quarter, offering clarity on cost pressures.

Asked by Sanjeev

Sequential Increase in Depreciation Direct
depreciation, we all know that is an impact towards the capitalization for building the manufacturing capabilities, increasing our localization on sub-assemblies, and bringing in new technology innovative products. During the year '25, 9-month period, April to December, the total investment amount was INR420 crores with respect to when we compare it to last year, it is INR 220 crores.

Explains the reasons for higher depreciation, linking it to ongoing capital expenditure for capacity expansion, localization, and new product development.

Asked by Sanjeev

Timeline and Financial Treatment of Maharashtra Government Incentive (INR 705 crores) Direct
This approval recognizes investments of INR 705.7 crores made between November 1, 2017 and October 30, 2024, qualifying us for incentives of the same amount... The incentive entitlement is valid for 15 years starting from May 1, 2025 to April 30, 2040, with an annual disbursement cap of INR 47.04 crore... we expect to begin realizing a portion of these incentives in the current year... accounting for almost INR 43 crores rupees in this fiscal year '26.

Clarifies the nature, timeline, and financial recognition of a substantial government incentive, which will impact future profitability and cash flows.

Asked by Praveen Sahay

Margin Decline in TV Product Category Direct
there was some pressure on input cost... this impact was mitigated by our strong brand power... focusing more on larger screen... local manufacturing premium TVs... local panel sourcing contributes roughly 29% for us, while overall local TV module procurement has already exceeded 55%.

Addresses margin pressures in the TV segment and highlights mitigation strategies through premiumization, focus on larger screen formats, and increased localization to reduce import dependency.

Asked by Natasha

Outlook on RAC Primary Sales and Channel Inventory Direct
AC season is very cyclical, and we have seen a softer summer last year. And we are very hopeful that this year will be a very hot summer... inventory has been already normalized, new BEE star rating ACs have come, we were the first one to introduce these ACs, overall channel motivation and confidence is very high and we will see a very good summer season this year.

Provides an optimistic outlook on the upcoming AC season, addressing inventory concerns and highlighting factors like new BEE norms and channel confidence that are expected to drive strong primary sales.

Asked by Natasha

3 min read 6 chapters

Detailed narrative

Q3 FY26 Performance Overview and Margin Pressures

LG Electronics India reported a revenue from operations of INR 41.14 billion in Q3 FY26, a decline from INR 43.96 billion in the same quarter last year. EBITDA decreased significantly to INR 1.96 billion from INR 3.4 billion, leading to a margin compression from 7.7% to 4.8%. This was primarily attributed to subdued sales impacting operating leverage, increased input costs (particularly copper and aluminum), currency-related headwinds, and the impact of the new Labour Code and electronic waste compliance costs. Working capital also increased to INR 11.3 billion as of December 31, 2025, from INR 8.1 billion a year prior, mainly due to higher inventory in compressor-led products.

Strategic Initiatives and Future Growth Vision

Despite the challenging environment, LG India is strengthening its product roadmap under the 'Make for India' strategy, combining global technology with deep insights into Indian customers, exemplified by the new Essential Series for under-penetrated regional markets. The company aims to double its export value by FY27, leveraging manufacturing capabilities to export premium products to the US and Europe, supported by US tariff rationalization and the India-EU Free Trade Agreement. Localization efforts have seen the rate increase from 45.1% in FY22 to 54.6% in Q3 FY26, with plans for continued growth.

Capital Expenditure and Manufacturing Expansion

LG India is reinvesting significantly in its business, with a key milestone being the INR 5,000 crore investment in its Sri City plant in Andhra Pradesh, to be phased over 4-5 years. This facility is expected to commence room air conditioner operations in Q4 CY26. The company's capital expenditure for the 9-month period of FY26 was INR 420 crores, an increase from INR 220 crores in the prior year, and is funded entirely through internal accruals. These investments aim to enhance production capacity, improve logistics, and support the localization roadmap.

Market Share Leadership and Product Strategy

LG India maintained market share leadership in key categories, including washing machines (33%), refrigerators (30%, up 0.5% YoY), AC (17.3%, up 0.4% YoY), and side-by-side refrigerators (43.3%, up 2.9% YoY). The company implemented price hikes of 7-10% on ACs and 2-3% on washing machines and refrigerators in November to offset input cost inflation. The strategy involves strengthening the premium B2C portfolio, broadening presence in the mass segment with the Essential Series, entering new categories like chest freezers, and expanding B2B opportunities in HVAC and information displays.

Government Incentives and Tax Settlements

The company secured an incentive of INR 705.7 crores from the Government of Maharashtra under the Electronics Policy 2016 for mega expansion projects. This incentive, valid for 15 years from May 2025, has an annual disbursement cap of INR 47.04 crore, with INR 43 crores expected to be recognized in FY26. Furthermore, LG India successfully entered a 9-year Advance Pricing Agreement with the Central Board of Direct Taxes, eliminating contingent liabilities of nearly INR 4.87 billion related to transfer pricing and royalty payments, which significantly de-risks its tax profile and enhances earnings visibility.

Outlook for Q4 FY26 and FY27

Management expressed confidence in a strong Q4 FY26, historically their largest quarter, anticipating double-digit revenue growth and mid-teen EBITDA margins, surpassing last year's Q4 performance. For the full FY26, the outlook is for early single-digit revenue growth with double-digit EBITDA margins. Looking ahead to FY27, the company targets double-digit revenue growth and aims to sustain early-teen digit margins, in line with FY25 levels, driven by premium product launches, diversified portfolio, and strong brand equity.

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