LG Electronics India IPO: Comparing the Korean Giant to Its Indian Consumer Durable Peers

After Hyundai’s IPO created a buzz, LG Electronics India, the country’s second-largest home appliances and consumer electronics major, has filed its DRHP with SEBI. This IPO aims to raise ₹15,000 crore by offloading a 15% stake, potentially ranking as India’s 5th largest IPO. The valuation is expected to position LG India at approximately $12.5 billion.

The timing of this IPO coincides with robust demand in the consumer electronics segment, supported by a surge in refrigerator and air conditioner sales, which contributed to 78% of LG India’s Q1 revenue this year.

LG Electronics Market Position

LG Electronics commands a significant share in India’s home appliances sector, drawing over 70% of its revenue from this segment. The company is a well-established player in a competitive industry, facing strong rivals in both Indian and global markets.

Indian Competitors:

• Havells
• Voltas
• Whirlpool
• Blue Star

Global Competitors:

• Haier
• Philips
• Samsung
• Sony

LG Electronics Peer-to-Peer Comparison

To understand LG Electronics’ standing in the industry, here’s a comparison with its Indian peers:

Note – *Approx estimation based on likely stake sell of 15% and IPO amount of ₹15,000 crores, Other than LG market-cap is as of December 10, 2024

Challenges and Opportunities

1. Timing Amid Geopolitical Uncertainty

The IPO coincides with recent geopolitical instability in South Korea, where emergency martial law was briefly declared before being reversed. Such events could impact investor sentiment.

2. Learning from Hyundai’s Experience

Hyundai’s IPO, though initially promising, failed to deliver post-listing gains due to high pricing, leading to a current trading discount of 6.5% below its issue price. LG must balance valuation and investor expectations to ensure a successful debut.

Key Stakeholders in the IPO

The book-running lead managers for LG’s IPO include:

• Morgan Stanley India
• J.P. Morgan India
• Axis Capital
• BofA Securities India
• Citigroup Global Markets India

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.