LG Electronics India is expected to sustain its growth momentum on the back of strong premium product demand, rising exports and increasing localisation, according to Nomura. The brokerage maintained its Buy rating on the company and raised its target price to Rs 1983 from Rs 1763.

LG Electronics India reported consolidated revenue of Rs 72.3 billion for 1QFY27, registering 15 percent year on year growth. Revenue was around 2 percent above Nomura’s estimate and 3 percent higher than consensus expectations. EBITDA increased 28 percent year on year to Rs 9 billion, while the EBITDA margin stood at 12.5 percent, ahead of Nomura’s 12.2 percent estimate and the consensus estimate of 11.8 percent. Adjusted profit after tax increased 35 percent year on year.

The Home Appliances segment recorded 14 percent year on year revenue growth, broadly in line with Nomura’s expectations. Growth was supported by the premium product portfolio and strong washer demand. However, the segment’s EBIT margin came in at 11.6 percent, below Nomura’s 12.5 percent estimate, mainly due to adverse commodity movements.

Home Entertainment delivered stronger growth, with revenue increasing 22 percent year on year. EBIT margin stood at 19 percent, significantly ahead of Nomura’s 15 percent estimate. The brokerage attributed the performance to a higher contribution from large-screen televisions, new product launches and normal promotional spending.

Management indicated that near-term demand trends remain favourable, supported by festive-season stocking, strong washer demand and increasing consumer preference for premium products and large-screen televisions. Televisions larger than 55 inches accounted for around 50 percent of first-quarter revenue. The company also expects growth to remain broad based across categories, while its B2B business is expected to grow around 20 percent.

Exports increased 30 percent year on year during the quarter and are expected to accelerate further as the company expands production at its Sri City facility. Compressor production at the plant is expected to begin in the third quarter, while air conditioner production is expected by the fourth quarter of FY27.

Nomura expects further improvement in margins from a favourable product mix, including premium products, exports, B2B operations and annual maintenance contracts, along with operating leverage and increasing localisation. LG Electronics India currently has localisation levels of around 55 percent and is targeting 65 percent over the next three to four years.

The brokerage expects revenue growth of 15 percent, 12 percent and 12 percent over FY27 to FY29, while raising its assumed EBITDA margin to 13.6 percent from 11.8 percent. This is expected to support a 26 percent earnings per share compound annual growth rate over the period.

Nomura also raised its target price to Rs 1983 by increasing its target price to earnings multiple to 43 times from 40 times and rolling forward its valuation to September 2027 earnings. The brokerage believes LG Electronics India’s valuation of around 39 times FY28 estimated earnings remains attractive and expects valuation multiples to remain near the upper end of its estimated 35 to 45 times trading range.