LG Electronics India’s ₹15,000 Cr IPO: Growth Prospects and Challenges

LG Electronics India, the Indian subsidiary of South Korea’s LG Electronics, has filed its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI). The IPO is set to raise approximately ₹15,000 crore and comes as LG seeks to capitalize on India’s booming consumer electronics and appliances market.

Key Highlights of the LG Electronics IPO

IPO Structure:

• The IPO will be an Offer for Sale (OFS), where the parent company LG Electronics will divest 10.18 crore shares, reducing its stake by 15%.
• Post-IPO, LG Electronics will still retain 576.9 billion shares in its Indian arm.
• No Fresh Issuance of Shares: This IPO will not generate any new capital for LG Electronics India.

IPO Size:

• The IPO is expected to raise an estimated ₹15,000 crore, making it one of the largest public offerings in India’s consumer electronics segment.
• Leading financial institutions, including Morgan Stanley India, JP Morgan India, Axis Capital, BofA Securities India, and Citigroup Global Markets India, are managing the offering.
• If successful, LG Electronics India will become the second South Korean company to enter the Indian stock market, following Hyundai Motor India.

LG Electronics Market Leadership and Growth Projections

LG Electronics India has maintained its market leadership in major home appliances and consumer electronics (excluding the mobile segment) for 13 consecutive years (2011–2023) in terms of volume and value market share in offline channels.

India’s appliances and electronics sector has witnessed an average annual growth of 7% over the past five years. LG Electronics India forecasts this growth to accelerate to 12% in the next five years, driven by factors such as rising disposable incomes, urbanization, and expanding market penetration in both urban and rural areas.

LG Electronics Key Financial Details

LG Electronics aims to raise approximately ₹15,000 crore by selling a 15% stake through the IPO. Following SEBI regulations:

• 35% of the offer will be reserved for retail investors.
• 50% will be allocated to institutional investors.
• The remaining 15% will be for non-institutional (high net-worth) investors.

LG Electronics, which has been in India for over 27 years, dominates categories like washing machines, refrigerators, televisions, air conditioners, and microwaves.

Significance of the LG Electronics IPO

• LG Electronics India will become the second South Korean conglomerate to list on Indian stock exchanges after Hyundai Motor India.
• This offering mirrors Hyundai Motor India’s IPO earlier this year, where the parent company raised ₹27,870 crore, making it India’s largest OFS to date.

Why Investors Should Watch LG Electronics IPO?

However, investors must be mindful of competitive risks arising due to operational overlaps and the absence of exclusivity agreements.

• LG Electronics India has been a trusted name in Indian households for over 27 years.
• Strong leadership in the appliances market backed by: a. Consistent growth b. Expanding rural and urban reach.