LG Electronics Shares Fall Up to 5% as Q2 Profit Declines and Margins Contract

LG Electronics Shares Fall as Q2 Profit Declines and Margins Tighten Amid Cost Pressures

Shares of LG Electronics India slipped sharply on November 14 after the newly-listed company reported a steep decline in quarterly profit and a notable contraction in operating margins. The stock, which has been under pressure since listing, dipped nearly 5 percent intraday following the release of its Q2 FY26 results, raising concerns among investors about rising costs and a subdued demand environment.

Trading at an intraday low of ₹1,590 per share, the stock hovered just above its 52-week low of ₹1,581.10. Although it recovered marginally by midday, LG Electronics shares were still down around 3 percent, reflecting market apprehension over weakening profitability at the electronics major.

LG Electronics Q2 Results Reveal Sharp Profit Drop

In its July–September results, LG Electronics India posted a net profit of ₹389 crore, marking a 27 percent year-on-year decline from ₹535.7 crore recorded in the same quarter last year. The contraction underscores the impact of inflationary pressures and rising input costs on the company’s bottom line.

Revenue from operations grew just under 1 percent to ₹6,174 crore, signaling stable but muted sales momentum. However, total expenses rose 5 percent to ₹5,728.95 crore, driven primarily by higher commodity prices and festive-season spending aimed at supporting distributors.

The company’s operating performance also took a hit. EBITDA fell nearly 28 percent to ₹548 crore, while EBITDA margin contracted to 8.9 percent, a drop that analysts say reflects significant cost inflation during the quarter.

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Company Attributes Margin Pressure to High Commodity Costs

In its earnings statement, LG Electronics India said the quarter was marked by a challenging demand environment and elevated input costs. Despite this, the company emphasized that it delivered “resilient topline growth,” pointing to continued consumer trust in the brand.

According to the company:
“The EBITDA margin drop was a result of the combined impact of rising commodity prices and incremental investments in festive go-to-market initiatives, undertaken to support distributors amid tough market conditions.”

The narrative indicates that while LG Electronics India focused on protecting market share during the festive build-up, these strategic investments weighed on short-term profitability.

Motilal Oswal Says Margins Under Pressure but Outlook Positive

Brokerage house Motilal Oswal Financial Services noted that LG Electronics’ margin contraction was expected due to elevated input and recycling costs, coupled with higher festive spending. However, the brokerage also highlighted positives, including improved market share in key categories such as televisions, refrigerators, room air conditioners and washing machines.

Motilal Oswal reiterated its ‘Buy’ call on the stock, stating that demand momentum is likely to strengthen supported by the recent GST rate cut, festive season traction and improving sentiment in discretionary categories.

The brokerage added:
“Margins were impacted by higher input costs and festive spends. Looking ahead, demand is expected to stay strong, supported by the GST rate cut and festive momentum. With a dual strategy of expanding LG Essential for value-focused buyers and introducing new premium ranges, the company aims to tap underserved markets and drive growth.”

Motilal Oswal further noted that although LG Electronics reported a challenging quarter, the company remains optimistic about upcoming demand, particularly with the wedding season and B2B expansion plans on the horizon.

Festive Investments and Market Conditions Pose Short-Term Challenges

The second quarter has historically been a preparatory phase for consumer electronics firms, ahead of the peak festive season. LG Electronics India appears to have followed this cycle, investing more aggressively in go-to-market initiatives to strengthen distribution networks and ensure inventory readiness.

However, with commodity prices remaining elevated and consumer demand still recovering, these investments have temporarily dented operating margins. Analysts say that if consumer sentiment continues to improve through the festive and wedding seasons, LG Electronics may regain some lost margin ground in the coming quarters.

Stock Outlook: Investors Watch Margin Recovery and Cost Trends

While the immediate market reaction to LG Electronics’ Q2 results was negative, analysts believe the long-term outlook remains stable. The focus now shifts to how quickly the company can recover its EBITDA margin as input costs normalize and festive demand supports sales.

Investors will closely monitor the company’s pricing actions, cost-management strategies and the performance of its premium appliance segment — an area where LG Electronics has traditionally maintained strong brand equity.

With its expanding product portfolio, renewed focus on value and premium ranges and continued leadership in home appliances, LG Electronics India remains well-positioned. However, sustained margin improvement will be crucial in restoring investor confidence and lifting the pressure off LG Electronics shares in the coming months.

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