Why LG Electronics India shares are surging today

Shares of LG Electronics India Ltd jumped 9.72 per cent in Friday's trade, hitting a high of Rs 1,732 after the company reported its June-quarter earnings.

The stock gained after the consumer electronics and home appliances maker reported a strong performance for the quarter, with Nuvama Institutional Equities highlighting better-than-expected revenue, EBITDA and adjusted profit after tax (PAT).

Nuvama said LG Electronics India posted a 15 per cent year-on-year (YoY) rise in revenue, while EBITDA and adjusted PAT increased 26 per cent and 28 per cent, respectively. The figures were 2 per cent, 5 per cent and 7 per cent above the brokerage's estimates.

Home appliances, which accounted for 77 per cent of total revenue, recorded 14 per cent YoY growth, led by washing machines, refrigerators and extended summer-led air-conditioner demand. The segment's EBIT margin increased 10 basis points (bps) YoY despite cost pressures, Nuvama said.

"Home entertainment revenue (23 per cent of total)/EBIT were up 22 per cent/49 per cent YoY, largely led by premium TVs. Management now expects to surpass previous mid-teens revenue growth and early double-digit FY27 EBITDA margin guidance," Nuvama added.

Following the results, Nuvama retained its 'Buy' rating on the stock and raised its 12-month target price to Rs 1,910 from Rs 1,820 earlier.

Nuvama said LG Electronics' Q1 performance was superior to that of most peers, reflecting the strength of its portfolio diversification, market dominance and execution. The brokerage added that LG Electronics is its top pick in the consumer durables space.

Meanwhile, Motilal Oswal Financial Services Ltd (MOFSL) said growth remained broad-based across home appliances and home entertainment, with premium products and television demand supporting performance.

"Management remains confident of achieving mid-teen revenue growth and an early double-digit EBITDA margin in FY27," it also said.

Technical view