LG Electronics is moving beyond its two-track strategy

LG Electronics India's September quarter (Q2FY27) performance has strengthened its growth narrative, even as the road ahead opens up new avenues.

Revenue grew almost 20% year-on-year to ₹7,380 crore, while Ebitda margin expanded 63 basis points to 9.5%. A richer product mix and operating leverage more than offset elevated commodity prices and higher go-to-market investments.

LG’s two-track strategy of premiumization and mass-premium penetration continued to deliver broad-based growth. Home appliances and air solutions revenue grew 21% to ₹4,772 crore, with double-digit growth across washing machines, refrigerators and air conditioners. Home entertainment revenue grew 17% to ₹2,608 crore, marking its third consecutive quarter of double-digit growth. Televisions larger than 55 inches led the segment, contributing over half of TV revenue.

Premiumization through products such as French-door refrigerators and large-capacity washing machines can improve the product mix, even as LG’s Essential series strengthens volume growth, helps capture first-time buyers, creates an upgrade pipeline for premium products and enables expansion into international markets.

The company’s global presence has expanded to 68 countries, while its information display business has opened up B2B opportunities across corporate offices, retail, hospitality and public spaces.

Its entry into vehicle solutions, spanning telematics, automotive displays, digital cockpits and connectivity solutions, opens up another B2B opportunity. Manufacturing at its Sri City facility can leverage LG’s established global technology and manufacturing ecosystem.

But much depends on sustaining margins. Raw material costs have increased 20% from a year ago, leading to a 52-basis-point contraction in gross margin. Premiumization and operating leverage helped offset the pressure, but currency volatility, commodity inflation and competitive intensity remain risks. The sequential decline in Ebitda margin from 12.5% in Q1 to 9.5% in Q2 also warrants monitoring.

LG’s management expects H2FY27 to outperform H1, retaining its guidance of mid-teens revenue growth and early double-digit Ebitda margins. Sri City’s ramp-up and compressor localisation should support the longer-term margin trajectory, but new businesses can take time to scale.

The stock has gained 21% this year, and is testing its all-time high of ₹1,836 while ICICI Securities has upgraded its target price to ₹2,100 from ₹1,850 on hopes that strong execution, improving product mix and upcoming manufacturing capacity at Sri City position LG favourably to sustain industry-beating growth.

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