LG Electronics India Ltd experienced a significant boost in its stock value this Friday, with shares soaring by 8.58 percent to reach Rs 1,714. This surge follows the company's announcement of robust June-quarter financial results, which significantly surpassed analyst expectations.
Strong Q1 Performance Drives Growth
The consumer electronics and home appliances giant reported a 15 percent year-on-year (YoY) rise in revenue for the quarter. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) saw an impressive 26 percent increase, while adjusted Profit After Tax (PAT) grew by 28 percent YoY. These figures notably exceeded Nuvama Institutional Equities' estimates by 2 percent, 5 percent, and 7 percent, respectively.
The strong performance was broad-based across the company's segments:
- Home Appliances: This segment, contributing 77 percent of total revenue, recorded a 14 percent YoY growth. Key drivers included robust sales of washing machines, refrigerators, and extended summer-driven demand for air conditioners. Despite cost pressures, the segment's EBIT margin improved by 10 basis points YoY.
- Home Entertainment: Accounting for 23 percent of total revenue, this segment saw a 22 percent increase in revenue and a substantial 49 percent growth in EBIT, primarily fueled by strong demand for premium televisions.
Management expressed confidence in surpassing its previous guidance, now expecting mid-teens revenue growth and an early double-digit EBITDA margin for the fiscal year 2027.
Analyst Outlook Remains Bullish
Following the stellar results, brokerage firm Nuvama Institutional Equities reaffirmed its 'Buy' rating on LG Electronics India shares. The firm also raised its 12-month target price for the stock to Rs 1,910, up from Rs 1,820, citing the company's superior Q1 performance compared to peers. Nuvama highlighted LG Electronics' strong portfolio diversification, market dominance, and effective execution, naming it their top pick in the consumer durables sector.
Motilal Oswal Financial Services Ltd (MOFSL) echoed this positive sentiment, noting that growth was consistent across both home appliances and home entertainment, with premium products and television sales bolstering overall performance. MOFSL also acknowledged management's confidence in achieving mid-teen revenue growth and an early double-digit EBITDA margin by FY27.