HDFC Securities picks LG Electronics India as the top choice post Q2FY26 earnings.

LG Electronics India Ltd has been selected as the top choice by HDFC Securities for Pick of the Week due to its strong position in the consumer durables sector, expanding manufacturing capabilities, and increasing presence in the premium and high-profit segment, according to the company’s Q2FY26 earnings report.

HDFC Securities has established a base case fair value of ₹1,669 and a bull case fair value of ₹1,780 for LG Electronics India for the upcoming 2-3 quarters. The brokerage firm identified the company’s robust brand reputation, premiumization strategy, and capacity expansion as the primary factors influencing the valuation framework.

Despite facing challenges such as industry slowdown, weather-related disruptions, GST timing impact, and geopolitical uncertainties, LG Electronics India managed to maintain a stable revenue of ₹6,174 crore in Q2FY26, representing a 1.0% year-over-year growth but a 1.0% quarter-over-quarter decline. The EBITDA and margin saw a 28% year-over-year decrease to ₹548 crore, with a margin of 8.9%, while net profit (PAT) experienced a 27% year-over-year increase to ₹389 crore, attributed to reduced commodity costs despite higher marketing expenses.

To counter cost pressures, LG implemented price hikes of 1.5% for refrigerators and 2.0% for washing machines during the quarter, leading to market share gains in several offline categories. The company achieved a market share of 27.5% in TVs, 29.9% in refrigerators, 17.3% in room air conditioners, and 33.4% in washing machines, with 62.6% domination in the premium segment of OLED televisions.

In a bid to enhance localization and boost exports, LG is set to invest ₹5,000 crore in a new facility at Sri City, Andhra Pradesh, focusing on manufacturing room air conditioners, compressors, refrigerators, and washing machines over the next 4-5 years. This move is anticipated to drive logistics savings, increase local sourcing to around 70%, and raise export levels, which currently make up 5%-6% of total sales.

With a widespread network of 35,640 touchpoints and 1,006 service centers across India, LG maintains its offline dominance in the consumer durables market, with offline channels contributing to 78% of sales for major appliances. The company also operates in the high-margin After Market Services (AMC) and Business-to-Business (B2B) segments, which collectively represent 6% of revenue and are expected to show growth potential in the future, aligning with LG’s expansion strategies for H2FY26.