Archive · 17 Nov 2025
Motilal Oswal Reiterates 'Buy' on LG Electronics India Despite Q2 Earnings Dip
LG Electronics India had a tough quarter with lower profits because it cost more to make things and run the business.
Even though their sales stayed about the same, their earnings went down a lot.
Because of this, some people who analyze stocks have lowered their expectations for how much the company will earn in the future.
However, one company, Motilal Oswal, still thinks LG Electronics is a good company to invest in.
They believe that LG will get better by making more products in India, running their factories more efficiently, and selling more high-end products.
They have set a price target for the stock that is higher than its current price.
They expect profits to go up again in the next couple of years.
LG Electronics India reported a 1% YoY revenue growth to Rs 6,170 crore in Q2 FY26, but EBITDA fell 28% and PAT dropped 27% due to cost pressures.
Motilal Oswal reduced its EPS estimates for FY26 by 13% and for FY26-FY27 by 7% each, but maintained a 'Buy' rating with a target price of Rs 1,890, indicating a 17% upside.
The brokerage values LG Electronics India at 45 times its FY28 estimated EPS, signaling confidence in long-term potential.
Expected improvements in profitability are attributed to higher localization, operational efficiencies, increased premium product mix, and growth in B2B and export markets.
LG Electronics India's stock is currently trading at 45x FY27 EPS and 39x FY28 EPS.
- Who
- LG Electronics India and Motilal Oswal
- What
- Motilal Oswal reiterated a 'Buy' rating on LG Electronics India, setting a target price of Rs 1,890, indicating potential upside despite a recent dip in quarterly earnings and reduced earnings estimates.
- When
- Q2 FY26 (July-September 2025) for earnings, and the report was issued following this period.
- Where
- India
- Why
- Despite near-term margin pressures (cost increases, under-absorbed fixed costs, higher recycling costs) leading to a decline in EBITDA and PAT, Motilal Oswal is bullish on LG Electronics India's long-term prospects due to expected improvements from higher localization, operational efficiencies, premium product mix, B2B, export growth, and AMC revenue.
Near-term Challenges
Long-term Potential
Earnings Performance
Near-term Challenges
EBITDA and PAT saw a significant year-on-year decline in Q2 FY26 due to cost pressures, including rising commodity prices and higher recycling costs.
Long-term Potential
Despite near-term margin pressure, the company’s long-term earnings outlook remains positive, with expectations of gradual profitability recovery driven by strategic initiatives.
Earnings Estimates
Near-term Challenges
Motilal Oswal has reduced EPS estimates for FY26 and FY26-FY27 due to the Q2 margin pressure.
Long-term Potential
The brokerage maintains its valuation based on future potential, valuing the company at 45 times FY28 estimated earnings.
- Q2 FY26 Revenue
- Rs 6,170 crore (1% YoY growth)
- Q2 FY26 EBITDA
- Rs 550 crore (28% YoY decline)
- Q2 FY26 Profit After Tax (PAT)
- Rs 390 crore (27% YoY decline)
- Operating Profit Margin (OPM)
- 8.9% (fell 3.5 percentage points)
- Motilal Oswal Target Price
- Rs 1,890 (17% upside from current levels)
- Valuation Metric
- 45x FY28 estimated EPS
- IPO Listing Date
- October 14, 2025
- IPO Price
- Rs 1,140
