LGEINDIA — earnings call

The transcript as filed. Every paragraph is addressable: its link names the page and the position it sits at in the call.

Prepared remarks

PLANNING · MR. GAGANJEET SINGH – CHIEF MANUFACTURING

MR. GAGANJEET SINGH – CHIEF MANUFACTURING

OFFICER · MR. SOONJOO SEO – INVESTOR RELATIONS OFFICER

MR. SOONJOO SEO – INVESTOR RELATIONS OFFICER MR. ADITYA BHASIN – HEAD, INVESTOR RELATIONS

Moderator · Conference Operator

MR. ANIRUDDHA JOSHI – ICICI SECURITIES LG Electronics India Limited May 22, 2026

Ladies and gentlemen, good day and welcome to the LG Electronics India Limited's Q4 and Full

Thank you.

Ladies and gentlemen, we'll take that as the last question for today.

I now hand the conference over to Mr. Aditya Bhasin for closing comments.

Thank you and over to you, sir.

Aditya Bhasin

Thank you all of you for attending our LG Q4 FY26 and full year FY26 earnings call.

With this, we conclude today's discussion.

Should you have any pending questions or require further clarification, please don't hesitate to call me directly.

Thank you and have a nice day.

Moderator · Conference Operator

Thank you, members of the management.

On behalf of LG Electronics India Limited, this concludes our conference.

We thank you for joining us and you may now disconnect your lines.

Thank you.

Questions and answers

Moderator · Conference Operator

Thank you very much, sir.

Ladies and gentlemen.

We will now begin the question and answer session.

The first question is from the line of Siddhartha Bera from Nomura.

Please go ahead.

LG Electronics India Limited May 22, 2026

Siddhartha Bera

Hi, sir.

Thanks for the opportunity.

Sir, my first question is, while we have seen revenues growing at 8% Y-o-Y in the quarter, we have not seen any operating leverage play out, which has led to decline in EBITDA margins on a Y-o-Y basis.

Can you please explain what is the reason for this and how should we think about the coming year?

Aditya Bhasin

Thank you, Siddhartha for the question.

This question will be addressed by our Chief Accounting Officer, Mr. Atul Khanna, after the Korean translation.

Please hold on.

Atul Khanna

Thank you for this question.

And this is a very valid observation.

Despite a challenging global environment, our sales grew by 8.1% in quarter 4 '26, which provided some operating leverage benefit.

However, the margin declined by approximately 250 bps, which was driven by a combination of few factors.

To start with, raw material costs remained broadly at similar levels but impacted marginally due to the pressure of commodity prices.

However, the rupee depreciated almost by 5.6% year-on- year in this quarter, creating a meaningful headwind on our import cost.

The single largest contributor was our channel promotion investments, which impacted margins by approximately 1.1%.These were temporary strategic investments made to separate our channel partners, drive sell-out, and strengthen our market position during this quarter, and build confidence among our channel partners.

Currency depreciation was other significant factor impacting the margins again by approximately 1%.

Electronic waste cost, which is a compliance cost, added a further impact of approximately 0.2% as our recycling targets increased from 60% to 70% as per government regulations.

Looking ahead, with the price hikes now in place across categories, promotional intensity rationalizing, hot summer going on, we are confident of recovering our margins for financial year '27 and to deliver our early double digit EBITDA margins for '27 full year.

Thank you.

Siddhartha Bera

Thanks for this, sir.

My second question is on the outlook side.

Can you clarify what is LG doing differently compared to peers, which will help it grow ahead of the industry?

And how will margins improve from the current levels as conditions normalize going ahead?

Aditya Bhasin

So, this question will be addressed by our respected CFO, Mr. Dongmyung Seo, after the Korean translation.

Dongmyung Seo

Thank you for your question.

As mentioned earlier, our confidence in outperforming industry growth does not rely on a single factor.

It comes from our clear differentiation and multiple growth drivers.

On the revenue side, exports are scaling up meaningfully.

We are entering neighbouring countries and key global markets through our essential series and premium product lines, achieving steady growth beyond the domestic B2C business.

The B2B segment is recovering strongly with ID recently achieving its highest ever quarterly sales.

Meanwhile, the non-hardware AMC business which generates high margin recurring LG Electronics India Limited May 22, 2026 revenue is expected to drive additional growth in FY2026 and serve as a stable growth engine.

New product categories are delivering strong contribution to our revenue.

Under our two-track strategy, premium French door refrigerators are gaining solid traction while dishwashers have already doubled revenue this year.

At the same time, we also launched the new Essential Series, allowing us to reach new consumer segments and untapped geographies.

Looking ahead, our entry into the segment of chest freezers will serve as an additional growth driver, further expanding LG's portfolio and strengthening revenue streams.

From a margin improvement perspective, we see three clear opportunities.

First, we have positioned exports as our core growth engine.

This provides the most opportunity to improve profitability and enhance overall margin performance.

Second, localization, which currently stands at 55.2 % and continues to grow is central to our Make in India strategy.

By deepening local manufacturing, we're reducing import dependency, lowering currency exposure and strengthening our cost structure.

Third, higher margin businesses such as AMC and B2B are expected to account for a larger share of our revenue compared to our core B2C business.

If the geopolitical situation in the Middle East stabilizes, lower oil prices and improved raw material costs are expected to follow.

This in turn could drive capital inflows into India and support a recovery in consumer demand.

In the consumer demand sector, we anticipate both, revenue growth driven by stronger demand and significant margin improvement supported by cost optimization.

To capture these opportunities, we will pursue a premium and mass premium portfolio strategy to enhance both growth and profitability.

Siddhartha Bera

Understood.

Moderator · Conference Operator

Thank you.

The next question is from the line of Sonali from Jefferies.

Please go ahead.

Sonali

Thank you for the opportunity and I must say, it's good to see a double-digit EBITDA margin, especially in the current uncertain macros and the cost headwind.

So, congratulations to the team for that.

I have three questions.

The first on the current industry scenario, you did mention that the demand is very strong?

So can you please help us understand the channel inventory right now versus say a comparison at the start of the year?

My second question is regarding the price hikes across all product segments.

So we know broadly that for aircons it is 12% to 13%, but across the rest, washers and TVs as well and do you think they are enough to sustain the margins or improve them going forward or should we take further hikes?

And the third is regarding capex, the capex outlook for F27 and also the update on the timelines of the new plant commissioning?

Thank you.

Aditya Bhasin

Thank you Sonali for the question.

The first part of the question is related to the inventory which will be handed over to Mr. Gurpinder Singh.

He will give you the answer for that.

For the second LG Electronics India Limited May 22, 2026 question is about the price hike which will be taken care by Mr. Sanjay Chitkara who is our Co- CSMO.

And third one is the capex which Mr. Atul Khanna, our Chief Accounting Officer will respond to after the current translation.

Please hold on.

Gurpinder Singh

Thank you for this question.

This is regarding the channel inventory of AC.

So basically I would like to share that Q4 is a big period for AC business for us.

55% of our annual business comes from Q4. And during this period, as per our strategy, we filled the channel with AC inventory to ensure sufficient stock availability during the summer.

I would like to share with you that we have sold more than 1 million ACs in Q4 FY26. Regarding channel inventory, the AC industry entered Q1 FY'27 with the same inventory levels as last year.

Yes there was a little stress due to the spell of low temperature during March, which temporarily slowed down the normal sell-out cycle.

As a result, dealers approached the season with cautiousness, given the elevated inventory and slower start to sales.

In LG’s case, on the contrary, our inventory levels were aligned with our planning and remain manageable and we were closely monitoring the pace of sell-out.

Dealer sentiment was steady, but like the rest of the industry, partners were watchful of how quickly demand picks up with the weather.

Importantly, the current sell-out trend is strongly supported by high temperatures across regions, helping us drive demand and ease channel pressure.

We have also supported our partners with timely product availability including the launch of new BEE rated compliant models which has kept their engagement active.

Thank you.

Sanjay Chitkara

I am Sanjay Chitkara, I am Co-Chief Sales and Marketing Officer at LG India.

I will answer about the price increase.

So you know we always approach our pricing increase very thoughtfully with balanced decisions, always guided by three key factors.

First is our brand's position, second is our market competitiveness, and third and foremost is our profitability.

So we do not take any pricing action in isolation and we take a very balanced approach for our consumer, trade partners, and our business.

So for ACs, we took a calibrated price adjustment in two phases.

In the first phase, it was clearly driven by a structural change of new BEE star ratings announcement and that was required to make a meaningful upgrade to the product specification helping deliver more energy efficient standards to our consumers.

The second adjustment was taken to protect our margin due to increased input cost and exchange rate movements.

And once we took this decision, we were the first one to take this bold decision and others also followed us.

And this is why our competitive price positioning has not changed in the market.

We are also simultaneously working on multiple internal levers depending upon deepening our component localization, trying to reduce our dependency on currency fluctuation, and continuous cost optimization across our operations, and actively improving our model mix so that our premium market share goes up and higher star rating products sell more and profitability can be improved.

LG Electronics India Limited May 22, 2026 Together these levers are giving us a sustainable and balanced path to improving our profitability than deeply depending upon price adjustment alone.

Furthermore, we should not forget that GST cut on RACs has significantly benefited consumers, which has offset the impact of these price adjustments and keeping our products accessible and affordable.

For refrigerator and washing machines, we have also taken similar price adjustments.

Consumer and channel response have been encouraging and there is no impact on our sales and sales targeted sales growth.

As far as further price increase actions are concerned, we do not have any immediate plan at this stage, but we are very cautious and monitoring the situation.

However, we will continue to closely monitor the raw material prices, currency movements, and market conditions, and take a calibrated decision as and when required.

Thank you very much.

Atul Khanna

This is Atul Khanna and now I will answer your third question on Sri City plant timeline as well as the investment plan.

I am pleased to confirm that our Sri City plant construction is fully on track as per our plan and we remain committed to our INR5,000 crore investment roadmap, deployed in a phased manner over the next few years, funded entirely from our internal accruals.

Coming to the specific timelines, our aircon compressor production line is scheduled to commence operations in the last quarter of calendar year 2026, which is third quarter of FY27 as communicated earlier, followed by aircon production line operational in first quarter of 2027 which would be quarter four of FY27. Washing machine and refrigerator lines will be added thereafter in a phased manner.

Our next two years investment is majorly planned to cover our total INR5,000 crores of investment.

And currently, till March 2026, we have invested INR657 crores already.

From a people perspective, we have already initiated hiring for key staff and other critical functions.

This reflects our confidence in construction timelines and underscores our commitment to ensuring full operational readiness when the plant goes live.

By building capabilities ahead of schedule, we are de-risking execution and strengthening our talent pipeline, a proactive step that supports seamless ramp-up once operations commence.

This facility represents a strategic assay for both our domestic operations and expanding export ambitions.

It will expand production capacity, enhance logistics efficiency, particularly for our South India business, which contributes 38% to 40% of our total business, and also reinforce our localization roadmap.

We see this as a key driver of sustainable growth and long-term shareholder value creation.

Thank you.

Sonali

Thank you team and all the best.

Moderator · Conference Operator

Thank you.

The next question is from the line of Vishal Goel from HSBC Securities and Capital Markets.

Please go ahead.

Vishal Goel

Yes, thanks for the opportunity.

I have two questions.

First one is on exports.

So your initial comments were very encouraging.

But given that current global environment, do LG Electronics India Limited May 22, 2026 you still maintain your earlier export guidance of doubling the exports compared to last year?

And my second question is on Essential Series.

So just want to check what is the response you are getting on the Essential series so far from the market and what are the products in this entry level line you are which is scheduled for launch?

So these are my two questions.

Thank you.

Aditya Bhasin

So the first part of the question will be addressed by Mr. Atul Khanna, who’s our Chief Accounting Officer and the second part is about the Essential Series progress will be addressed by Mr. Sanjay Chitkara, our Co-CSMO, after the Korean translation.

Atul Khanna

So, thank you for your first question.

Let me address that about exports.

Our export business is consistently delivering better margins and we are expanding our exports going forward for FY27. As you rightly mentioned, under our ’global south strategy’, we are expanding our export base with a greater share of premium products.

And as part of this plan we will be exporting high value offerings such as side-by-side refrigerators and Top Freezers (790 liter plus) and front-load washing machines that are all manufactured in India for developed markets, while also supplying LG Essential Series to other developing countries.

This approach ensures a well-diversified export portfolio across geographies and price points strengthening both growth and margins.

So, our clear guidance is to expand our exports very significantly considering the Middle East situation so far.

As a part of LG’s global growth, we benefit from our order allocations from headquarters giving us a clear demand visibility, a key advantage over peers in terms of currency fluctuation.

Our export receivables naturally hedge import payable creating a built-in currency buffer as export scales.

Further, this natural hedge will continue to strengthen our profitability with our diversified portfolio across developed and emerging market reducing geographical risk.

Through our Pune plant we have already built on our premium product capacity which will support exports of the premium side-by-side refrigerators, Top Freezers and Front loading washing machines.

We are also building our capability and capacity through our Sri City plant in FY27 to boost the capacity to double, to further support our future export plans and increase our asset return and margins FY27 onwards.

Sanjay Chitkara

Thank you.

I will answer on the Essential Series.

Essential Series is a product lineup that we introduced on 14th of October last year.

Prior to launching this range, we actually visited 1200 Indian households across India’s tier 2 and tier 3 towns.

The Essential Series was designed to meet everyday needs with a strong emphasis on durability, functionality and the same LG aesthetic appeal.

It reflects LG’s commitments to delivering affordable premium offerings across both home appliances and electronics.

Regarding the response of this product. this range was initially offered with only limited SKUs, but yet, the response has been very encouraging.

For the washing machine alone, we have sold 1 lakh units.

In Q4 FY’26 and the similar period we sold roughly 80,000 Essential Series refrigerators.

On the RAC front, we introduced a lower than 1 ton capacity unit which was 0.8 LG Electronics India Limited May 22, 2026 ton and the sale was roughly 20,000 units.

In the near future, we will further expand this series in various capacities, various variants, color and designs.

We will also expand the Essential Series in televisions as well.

Currently we are commencing exports as my colleague Mr. Atul Khanna also explained earlier.

We are expanding the export of Essential Series to 22 countries.

Thank you very much.

Vishal Goyal

Thank you for a detailed response.

Thanks team.

Moderator · Conference Operator

Thank you.

The next question is from the line of Sanjeev Kumar Singh from Motilal Oswal Financial Services.

Please go ahead.

Sanjeev Singh

Thank you for the opportunity, Sir.

First question is in terms of demand.

So, you mentioned in your opening remark that there has been a significant improvement in demand in April and May 26.

Can you throw some light on how has been the industry growth rate as well as our growth rate in these two months?

You also discussed about the price hikes in different categories.

Are these hikes sufficient to offset cost increases which have been seen till now or you need to take some more price hikes?