LG Electronics Ltd. is creating ripples on Dalal Street with the release of its India IPO which is the second by a South Korean firm after Hyundai. As reported by Hindustan Times, the consumer electricals giant seeks to tap India's booming equity market, and analysts predicting a 22–25% listing premium.
The ₹11,607 crore offer is all an offer-for-sale (OFS) by the Korean parent and will not raise any new capital. After listing, the parent holding in LG will decline to about 85%. Leading merchant bankers like Kotak Mahindra Capital, Morgan Stanley India, and JM Financial, are handling the issue.
Analysts are hopeful amid strong anchor response
According to Hindustan Times, LG Electronics India has already mobilized ₹3,475 crore from marquee anchor investors such as Abu Dhabi Investment Authority, Goldman Sachs, BlackRock, and the Government of Singapore. Experts consider this a "vote of confidence" in the long-term prospects of the company.
With a price range of ₹1,080 to ₹1,140 per share, the IPO, which is open for subscription from October 7 to October 9, values the company at up to ₹80,000 crore. Brokerages like Angel One, Motilal Oswal, and Ventura Securities have issued "Subscribe" ratings based on LG's leadership position in home appliances and steady profitability, despite the valuations being somewhat rich compared to the peer group of Voltas and Havells.
Make in India push and long-term growth story
With FY24 revenue of ₹26,782 crore and a net profit of ₹1,710 crore, LG Electronics India has made a significant impact in the consumer electronics industry. The company is positioned to become a major player in India's "Make in India" growth story thanks to its expansion plan for its manufacturing base, which includes a new $600 million plant in Sri City, Andhra Pradesh.
While the valuation may appear stretched, analysts are of the view that the IPO presents investors with a chance in a lifetime to own a part of one of India's most beloved consumer brands. In case the listing works, LG's is likely to be followed by other international giants such as Samsung and Whirlpool.
