Crisil Ratings stated that the company's revenue remained flattish in the first half of fiscal 2026 due to moderation in sales of cooling appliances (ACs and refrigerators) in the first quarter led by early onset of monsoon and goods and services tax (GST)-related sale deferrals in the second quarter of fiscal 2026. The revenue is expected to start picking momentum in the second half of fiscal 2026, driven by GST rate cuts, wedding & festive season and upcoming summer seasons.
The operating margin improved by nearly 2% to 12.8% in fiscal 2025 due to softening of raw material prices and economies of scale. However, the margin moderated to 10.2% in the first half of fiscal 2026 due to elevated commodity prices and strong festive promotions amid weak demand, which led to increase in discounts amidst intense competition.
The company has taken price hikes of 2% post festive period in some of the product category, which along with expected stable demand in the second half of this fiscal is expected to improve profitability.
The financial risk profile remains robust, backed by strong networth and nil debt. Networth improved to Rs 5,961 crore as of 31 March 2025, as compared to Rs 3,764 crore a year ago.
Also, the company has capital expenditure (capex) of Rs 5,000 crore for the next 4-5 years for a greenfield manufacturing facility at Sri City (Andhra Pradesh) for ACs, AC compressor, washing machines and refrigerators in a phased manner. This phased investment is expected at Rs 1,000-1,200 crore per year and will be funded via internal cash accrual.
Liquidity has been strong, with cash and cash equivalents of Rs 3,741 crore as on 31 Marsh 2025, which increased to Rs 4,284 crore as of September 2025. Further, unutilised fund-based limit will aid liquidity.
The ratings continue to reflect the company's leading position across diversified product portfolio, robust financial risk profile, strong operating capabilities and operational and technological links with LG Electronics Inc (South Korea).
These strengths are partially offset by exposure to intense competition in the consumer durables segment and susceptibility to volatility in raw material prices and foreign exchange (forex) rates.
LG India is a subsidiary of LG Electronics Inc, South Korea. The company has one of the widest product portfolios among consumer durables players in India.
The scrip shed 0.78% to end at Rs 1521.90 on the BSE on Friday.
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