Motilal Oswal has initiated coverage on the stock on the day of its listing with a “buy” recommendation and a price target of ₹1,800 per share, which implies a potential upside of 58% from its issue price of ₹1,140 per share.
In its “bull case” scenario, Motilal Oswal has projected a price target of ₹2,085 for shares of LG Electronics India, which implies a potential upside of 83% from the issue price.
India’s home appliances and consumer electronics market is estimated to grow at a Compounded Annual Growth Rate (CAGR) of 14% between calendar year 2024-2029 and LG Electronics India, with its leadership across key product categories, is well positioned to capitalize on this growth opportunity, Motilal Oswal wrote in its note.Motilal Oswal expects LG Electronics India to continue trading at higher multiples led by strong return ratios, as it expects the company’s Return on Equity (RoE) and Return on Invested Capital (RoIC) to reach 30% and 66% by financial year 2028, higher operating cash flow conversion, a strategic focus on localization, which will further aid gross margins, targeted growth in high-margin B2B and AMC businesses, and a leadership position across key product categories.
Distribution is the key competitive strength for LG Electronics India, according to Motilal Oswal, who added that the company also operates one of India’s largest after-sales network, comprising of over 1,000 service centers. The allocation of nearly 4.5% of topline towards advertising expenses is likely to continue till financial year 2028, the brokerage added.
Key downside risks include any increase in royalty by the parent company LG Electronics Korea, volatile raw material prices and intensifying competition.
LG Electronics India’s IPO received bids worth ₹4.5 lakh crore, making it the most bid Indian IPO in history, surpassing the previous record held by Bajaj Finance.
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