LG Electronics IPO: Strengths, risks and key things to know as SEBI gives nod to float issue

LG Electronics IPO: South Korean chaebol LG's subsidiary, LG Electronics India, has received a nod from the markets regulator, the Securities and Exchange Board of India (SEBI), to float an initial public offer. This is the second South Korean firm to enter Indian stock markets after Hyundai Motors India in October last year. As LG Electronics IPO gets closer to its issue, here are key things to know.

LG Electronics IPO: Key things to know

• LG Electronics IPO structure: The initial share sale is solely an offer for sale (OFS) without any fresh issuance of shares.
• Objectives: As there is no fresh issue component, the company will not get any proceeds from the IPO. The money raised will go to the South Korean parent, which will divest over 10.18 crore shares or a 15% stake.
• Issue size: The company has not divulged the total issue size, but it could be around ₹15,000 crore, PTI reported, citing people familiar with the matter.
• Financials: LG Electronics India reported a 7.48% increase in revenue from operations to ₹21,352 crore for the financial year 2023-24, compared to ₹19,864.5 crore a year back. Profit after tax rose 12% to ₹1,511 crore in FY24, as against ₹1,348 crore in the previous fiscal.
• Book-running lead managers and registrar: JP Morgan India, Axis Capital, Citigroup Global Markets India, BofA Securities India, and Morgan Stanley India are the issue's book-running lead managers. KFin Technologies Ltd is the registrar.

LG Electronics IPO: Strengths

• LG Electronics India is the number one player in the home appliances and consumer electronics industry for 13 straight years (CY2011 to CY2023), according to the market share in the offline channel in India, as per the Redseer report.
• The company has the largest distribution network among other players in home appliances and consumer electronics business as of June 30, 2024, allowing it to provide personalised consumer services.
• The company has strong operational efficiency through robust manufacturing capabilities and localised supply chain.

LG Electronics IPO: Risks

• LG Electronics India is supported by its promoter in various aspects of business. Any change in relation can impact business, reputation, and financial condition.
• It is possible that the promoter may engage in businesses that compete with the company, which could give rise to conflicts that can affect business.
• The company's top 10 suppliers contributed 31.44% of total purchases of raw material for the quarter ended June 30, 2024. Any disruption in the supply of raw material can impact business.