LG Electronics India Limited

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.

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.

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.

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.

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.

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.