LG India plans major IPO seeking premium valuation

LG Electronics India is preparing for a major initial public offering (IPO) in what could be one of India's largest listings this year. The company aims to raise between $1 billion and $1.5 billion, potentially valuing it around $15 billion. The exact date for the IPO is not yet announced. As India's second-largest electronics firm, LG dominates the consumer market. It leads in various product categories, including washing machines, refrigerators, and air conditioners. The company has a vast distribution network, which helps maintain its market share. However, investor interest is mixed. Concerns arise about slowing revenue growth and increasing royalty payments to its parent company in South Korea. Over recent years, LG's revenue growth rate has decreased, while competitors have outpaced it. Nevertheless, LG remains profitable, with strong earnings and higher margins compared to its peers. The IPO will involve selling existing shares, meaning that proceeds will go to LG Electronics Inc. and not LG India itself. Despite worries about the valuation being too high at a price-to-earnings multiple of 85, LG’s leadership in the industry and operational efficiencies could offer long-term benefits. India's growing consumer electronics market, fueled by rising incomes and urbanization, presents significant opportunities for LG. While its valuation is seen as potentially stretched, the company is well-positioned for growth. Investors are keen to see if they will get good returns from the upcoming IPO.