/** blogpostTitle: LG Electronics India Q4 FY26: Record Revenue, Margin Reset, and a Sri City Capex Cycle */

LG Electronics India Q4 FY26: Record Revenue, Margin Reset, and a Sri City Capex Cycle

LG Electronics India Limited closed Q4 FY26 with its highest ever quarterly revenue from operations. Revenue came in at INR 80.54 billion, up 8.1% year on year, helped by demand recovery across categories. Profitability also improved sharply versus the previous quarter, with EBITDA at INR 9.45 billion and an EBITDA margin of 11.7%.

But the quarter also made one thing clear: the margin path is being shaped as much by macro variables as by volume. Management pointed to rupee depreciation and elevated commodity prices as the main year-on-year headwinds. In the earnings call, the company quantified part of this impact, stating that channel promotion investments reduced Q4 margins by about 1.1% and currency depreciation by about 1%.

For the full year FY26, revenue from operations was INR 246.05 billion, up 1.0% year on year. The year was uneven. Management said the first half was affected by GST transition timing, a cooler-than-expected summer, and geopolitical headwinds, while the second half recovery highlighted underlying demand strength. Full year EBITDA declined to INR 24.08 billion versus INR 31.10 billion in FY25, and PAT fell to INR 16.85 billion versus INR 22.03 billion.

Q4 performance was led by H&A, while HE rode large-screen demand

The company reports two operating segments: Home Appliances and Air Solution (H&A), and Home Entertainment (HE). H&A remained the core engine in Q4 FY26, generating revenue of INR 65.16 billion, compared with INR 15.37 billion in HE.

H&A growth was described as broad-based, with premium-led momentum following the BEE rating transition. The company said it crossed a milestone of 1 million plus room air conditioner sales in the quarter. Premium categories like fully automatic washing machines, French door refrigerators, and 5-star rated room ACs supported higher average selling prices. Dishwashers were highlighted as an emerging growth driver.

HE delivered faster year-on-year growth, with Q4 revenue up 19.6% to INR 15.37 billion. Management linked this to strong demand for larger screen TVs supported by Cricket World Cup-related consumption. The Information Display business also saw strong growth due to order inflows across commercial TV and signage, and the company reported maintaining premium leadership with 60.0% OLED market share as of YTD March 2026.

Why margins fell year on year even with revenue growth

The quarter’s margin discussion was unusually specific for a consumer durables business. Management agreed that operating leverage did not show up on a year-on-year basis despite 8.1% growth. The company said the rupee depreciated by about 5.6% year on year in Q4 FY26, raising import costs. It also highlighted commodity pressure.

The biggest single driver of the year-on-year margin decline, as shared in the call, was channel promotion investments. These were described as temporary and strategic, aimed at supporting channel partners, driving sell-out, and strengthening market position. In HE, management also said marketing and promotional investments rose to capitalize on Cricket World Cup demand, while the company maintained cost discipline in non-marketing areas.

This framing matters for FY27 expectations. The company is signalling that part of the Q4 margin compression was discretionary and time-bound, while the currency and commodity drivers are cyclical. At the same time, the business remains exposed to foreign exchange because a material portion of inputs are imported.

FY27: EXCEL strategy, export scaling, and the Sri City investment plan

Management laid out a roadmap for FY27 built around a strategy it calls EXCEL: Export expansion, Capability of new factory production, Expansion of market leadership and new business, and Localization.

Exports sit at the center of this plan. Management said it has already started exports of large capacity refrigerators to advanced markets in Q1 FY27, and has begun exporting the Essential Series to neighbouring countries. It also stated that export growth provides a natural hedge against rupee depreciation, since export receivables can offset import payables.

The second major pillar is Sri City. The company reiterated a total planned investment of INR 50 billion, funded entirely through internal accruals. By March 2026, around INR 6.57 billion had been deployed under capital work in progress and capital advances. The company provided timelines in the call: compressor production is scheduled to start in Q3 FY27, followed by room air conditioner production in Q4 FY27. Washing machine and refrigerator lines are expected to be added in phases thereafter.

Alongside capacity and exports, management expects mix improvement to come from higher-margin revenue streams. It described Annual Maintenance Contracts as a high-margin recurring revenue line and said the B2B business is becoming a larger contributor, supported by government infrastructure projects and recovery in corporate and hospitality orders.

Balance sheet, cash flows, and the cost of keeping liquidity high

As of March 31, 2026, cash and cash equivalents stood at INR 44.76 billion. Management emphasized that this cash buffer provides flexibility to fund the Sri City capex cycle without external borrowing. FY26 operating cash flow was INR 17.21 billion, while investing cash flow was negative INR 8.56 billion, reflecting higher capex.

Returns have moderated. Return on capital employed declined to 25% in FY26 from 43% in FY25, and return on net worth dropped to 22% from 37%. Management attributed part of this to keeping cash balances deliberately high to fund Sri City, and to weaker profitability in the first half.

Working capital also became heavier. Net working capital days increased to 29 in FY26 from 21 in FY25, and Q4 showed a working capital outflow. Management said inventory levels normalized after the BEE transition and that channel inventory entering FY27 is healthy and lean, particularly for summer-led categories.

Key takeaways

LG Electronics India exited FY26 with a clear contrast: a record Q4 that showcased demand strength and category leadership, and a full year where profitability and return ratios reset lower due to macro pressures and a weaker first half.

For FY27, management is guiding to mid-teen revenue growth and early double-digit to early-teen EBITDA margins. The levers are visible and measurable: export expansion, rising localization from the current 55.2%, scaling AMC and B2B revenues, and operating leverage as volumes recover. The biggest execution variable is the Sri City ramp-up, where the company has committed INR 50 billion of investment with near-term milestones for compressor and AC production.

The story for investors is less about one strong quarter and more about whether a higher export mix, deeper localization, and a new manufacturing base can structurally reduce currency sensitivity and rebuild margins over the next cycle.