LG Electronics IPO: 90 mn shares worth Rs 8,500 crore trade in 30 min; check fresh targets

Shares of LG Electronics India made a strong Dalal Street debut as the consumer durable player was listed at a stellar 50 per cent premium over its issue price of Rs 1,140. However, the stock dropped 5 per cent from its day's high at Rs 1,736.40 to Rs 1,650.05 in its maiden trading session, led by heavy trading volumes.

In the first 30 mins, a total of 89.3 million equity shares of LG Electronics India exchanges hands cumulatively on both BSE and NSE, valued at Rs 8,500 crore. In fact, in the first five minutes nearly 30 million shares were traded on the exchanges as investors aimed to book gains.

Despite a listing day dip, LG Electronics India managed to attract interest from as many as four brokerage firms who initiated coverage on the stock even before its listing. The counter breached some targets, which some analysts see up to 20 per cent upside from its listing price and 80 per cent from its issue price.

ICICI Securities initiated coverage on LG Electronics India with a 'buy' rating and a target price of Rs 1,700 which was breached on its listing at Rs 1,715. It cited strong competitive advantages, share-of-voice is higher than that of peers, strong return ratios and FCF over FY14-25, market leadership in most white goods and revenue contribution of LG India to parent’s as rationale for its call.

"We initiate coverage on LG Electronics India with ‘BUY’ rating and target price of Rs 1,780 valuing at 42 times FY28E earnings," said PL Capital. "LGEL is a key player in the consumer electronics and home appliances market, offering a diverse product portfolio with a strong focus on innovation and quality. Extensive distribution network and premium brand positioning ensure its market leadership across categories," it said.

Motilal Oswal Financial Services also initiated coverage on LG Electronics India with a 'BUY' rating and a target price of Rs 1,800, premised on 40 times FY28E EPS. "We expect it to trade at higher multiples, given the strong return ratios, higher OCF conversion, a strategic focus on localization, targeted growth in high-margin B2B and AMC revenues, and a leadership position across key product categories," it said.

Emkay Global said LG has, over the last 3 decades, built a formidable franchise, which leads in key large appliance categories with premium positioning, leveraging its global R&D strength, brand power, and superior execution. Following the parent's 'Global South' strategy of driving global growth, India would play an important role and is likely to contribute 1/3rd of global growth over 5 years, it said.

It initiated coverage on LG Electronics India with 'BUY' and target of Rs 2,050 at 50 times Sep-27E PER. Its target is suggesting 20 per cent uspide from listing price and 80 per cent from IPO price. However, Emkay has flagged continued industry-wide demand slowdown and rise in competition as key risks for its rationale.

The IPO of LG Electronics India ran for subscription between October 07-09 to raise a total of Rs 11,607 crore. It sold its shares in the price band of Rs 1,080-1,140 per share with a lot size of 13 shares. Incorporated in 1997, New Delhi-based LG Electronics India is a manufacturer and distributor of home appliances and consumer electronics, excluding mobile phones

A host of major brokerage firms were positive on the issue, suggesting to subscribe to it. Morgan Stanley India Company, JP Morgan India, Axis Capital, BofA Securities India and Citigroup Global Markets India were the book running lead managers for LG Electronics IPO, while Kfin Technologies was appointed as registrar of the issue.