LG Electronics India Navigates Headwinds with Strategic Vision and Market Share Gains in Q2 FY26

LG Electronics India Limited, a prominent player in the Indian consumer durables sector, recently unveiled its performance for the second quarter of Fiscal Year 2026. The company reported a resilient revenue from operations of INR 6,174 crore, marking a modest 1.0% year-on-year growth despite facing a challenging market environment. However, the quarter saw a notable contraction in profitability, with EBITDA declining to INR 548 crore and the EBITDA margin compressing to 8.9% from 12.4% in Q2 FY25. Net profit for the quarter stood at INR 389 crore, reflecting the impact of rising commodity prices and increased investments in festive Go-to-Market initiatives.

The company's performance was influenced by several external factors, including a cooler summer, early monsoon, currency volatility, US tariffs, and geopolitical tensions. A significant event during the quarter was the GST rate cut announcement on August 15, which, despite its positive intent, led to a temporary deferment of purchases by partners and customers ahead of its implementation on September 22. Despite these headwinds, LG India demonstrated underlying brand strength and consumer confidence, managing to maintain stable year-on-year revenue and significantly improve its market share across key product categories.

Segmental Performance and Market Leadership

The Home Appliance & Air Solution (H&A) segment continued to reinforce LG India's leadership, contributing INR 3,948 crore to the total revenue. The segment gained market share across key categories, with side-by-side refrigerator market share increasing to 43.2% (up 4.5% year-on-year), underscoring its dominance in the premium cooling segment. In the washing machine category, LG maintained its absolute leadership with a 33.4% market share. The EBIT margin for H&A stood at 8.2%, impacted by elevated commodity prices and higher recycling costs.

The Home Entertainment (HE) segment reported revenue of INR 2,226 crore, a 3.0% year-on-year growth, driven by demand in the TV segment during the festive season. The company strengthened its leadership by improving offline TV market share to 27.5% (up 1.4%). Notably, LG's OLED market share increased to 62.6% (up 4.2%), reinforcing its premium TV segment leadership. The HE segment's EBIT margin was 12.6%, also affected by commodity prices and Go-to-Market investments. The information display (B2B) business within this segment faced challenges due to US tariffs and geopolitical issues, leading to lower infrastructure spending.

Strategic Initiatives for Future Growth

LG Electronics India is actively pursuing a multi-pronged strategy to ensure long-term profitable growth. A key initiative is the launch of the LG Essential series, designed for aspirational and first-time buyers. This series, under the slogan 'Har Ghar Appliances, Har Ghar Happiness,' aims to widen the price spectrum and penetrate underpenetrated regional markets by offering quality products tailored for Indian lifestyles at value-conscious price points. The series has already gained strong early traction, with more models, including a 0.9-ton RAC and a microwave with an air fryer kit, slated for launch this fiscal year.

Another cornerstone of its strategy is the expansion of its manufacturing footprint with a third factory in Sri City, Andhra Pradesh. This ambitious project involves a total investment of INR 5,000 crore over the next four to five years, with an annual outlay of INR 1,000-1,200 crore. The facility is expected to be fully operational by FY29, with the first product line (room air conditioners) commencing operations by October 2026, followed by the aircon compressor line in Q4 FY27. This expansion will significantly boost production capacity, improve logistics, and strengthen the supply chain, supporting the company's localization roadmap and export ambitions.

LG India is also committed to expanding its export footprints, leveraging India as a global production hub for LG's 'Global South' strategy. The company plans to identify new export destinations from its Sri City facility, capitalizing on favorable tariff shifts and India's growing manufacturing capabilities. Furthermore, the company is strengthening its B2B business, focusing on high-growth areas like HVAC and information display, and tapping into the data center cooling market. The scaling up of its Annual Maintenance Contract (AMC) business is another strategic move, aiming to drive service-led growth and build long-term customer relationships through high-profit recurring revenue streams.

Outlook and Management Confidence

Looking ahead, LG India's management anticipates a recovery in consumer sentiment driven by the recent GST rate cuts, festive demand, and wedding season tailwinds. They expect premium appliances to lead this recovery. The company aims to improve its localization rate to 70% in the next three to four years from the current 55.8%, which, along with operational efficiencies and growth in high-margin segments like B2B and AMC, is expected to improve overall margins. The management's tone is balanced, acknowledging short-term challenges while expressing strong confidence in its long-term strategic direction and ability to outperform the industry.

LG Electronics India Limited's Q2 FY26 performance underscores its strategic clarity and disciplined execution amidst a dynamic market. Despite short-term profitability pressures, the company's unwavering focus on market share expansion, localization, and strategic investments positions it for sustained growth and continued leadership in the Indian consumer durables market.