LG Electronics India shares extend gains after 50% listing pop; Nomura adds to consensus 'buys'

Shares of LG Electronics India Ltd. gained on Wednesday, October 15, a day after the stock ended its trading debut with gains of 50% in comparison to its issue price of ₹1,140 per share.

The stock listed at ₹1,710.10 on the Stock Exchange against its issue price of ₹1,140, while it debuted at ₹1,715 on the Bombay Stock Exchange, rising 50.4%. The stock eventually ended the session at ₹1,682.8, which is a 47.6% jump from the issue price.

There was active investor interest in the stock on listing day, as shares worth ₹11,651 crore changed hands on the stock's trading debut. As many as 6.9 crore shares were traded, with 61% of those being marked for delivery. LG Electronics India ended the session with a market capitalization of ₹1.14 lakh crore.

The India unit is now more valuable than its South Korean-parent, valued at over $13 billion, compared to the parent-company valuation of $9.2 billion.

Nomura adds to consensus 'buy'

Brokerage firm Nomura on Wednesday initiated a "buy" rating on LG Electronics India, with a price target of ₹1,800 per share, becoming the ninth brokerage to initiate coverage on the stock within two days of listing.

It believes India's favourable demographics, coupled with relatively low penetration of various large appliances, offers a significant runway for growth over the medium term.

Interestingly, premiumisation is emerging as a secular theme across multiple categories providing a tailwind for strong revenue growth, it said. Hence, value creation for investors will largely depend on companies that innovate, localise and profitably capture a larger pie of the premium landscape, according to Nomura.

Nomura said given the company's robust return on equity (RoE) and return on invested capital (RoIC) estimated at 31% and 56% respectively for FY28, it expects the firm to trade at the mid-point of the trading band of 30x - 45x one year forward earnings.

Six other analysts also gave LG Electronics India shares a "buy" rating on its listing day, projecting a potential upside of as high as 80% from the stock's issue price.

IPO and listing

Overall, the LG Electronics India issue was subscribed 54 times, led by institutional investors, who bid more than 160 times the total number of shares reserved for them. The non-institutional and investors and retail categories too witnessed robust participation.

Prior to the subscription, the company raised ₹3,475 crore from anchor investors. The IPO was priced in the range of ₹1,080-₹1,140 per share.

The entire issue was an offer for sale (OFS). Its parent firm LG Electronics Inc. was divesting part of its stake. The Indian unit will not receive any proceeds from the issue.

LG Electronics is now the second South Korean company to tap the Indian capital market, following Hyundai Motor India Ltd.'s debut in October last year.

LG Electronics India shares were up 1.7% at ₹1,718 apiece around 9.20 am on Wednesday.

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