The IPO of LG Electronics will close today i.e. on 9th October. This issue was opened on 7 October. The LG brand has a reach in every household in India. LG Electronics holds leadership positions in many consumer durable appliance categories. Despite this, the price band of shares kept by the company in the IPO has surprised the analysts. LG is offering its shares at a discount compared to Havells, Blue Star and Voltas.
Share price lower than rival companies
The upper price band of LG Electronic India shares is Rs 1,140. This is around 35x EPS in FY25, while EV/EBITDA is 25x. This means that after listing the market capitalization of the company will be around Rs 77,400 crore. Shares of Havells, Voltas and Blue Star are trading at 63-68 times their trailing earnings. Whirlpool India is also trading at more than 40 times.
Better performance on every financial standard
Analysts at SBI Securities believe that considering the financial strength of LG, the share price could have been higher. The company’s revenue has grown at an annual rate of 10.8 percent between FY23 and FY25. The growth of EBITDA was 28 percent and that of PAT was 27.8 percent. The company’s revenue in FY25 was Rs 24,367 crore. EBITDA was Rs 3,110 crore. Net profit was Rs 2,203 crore. Operating margin was 12.8 percent and net margin was 9 percent.
no debt on balance sheet
The performance of LG India is better than rival companies on every standard. Havells’ EBITDA margin was around 9.8 per cent in FY25. Bluestar had 7.3 percent. Voltas had 7.2 percent. Whirlpool had 7 percent. LG has no debt on its balance sheet. Its return on capital employed is 42-50 percent. This is 10-15 percent more than rival companies. LG’s return on equity is 37 percent, while the industry average has been between 10-20 percent in FY25.
Shares available at 50 percent discount
Brokerage firms believe that the valuation of LG India is low. Elara Securities has said that the share price in this issue is very attractive. Despite strong profits, high revenue and working capital efficiency, it is available at 50 percent discount compared to rival companies. Geojit and Choice Broking have also described LG’s RoE and ROCE as superior. He has advised to subscribe this stock.