IPO optimally priced to guarantee in the long term shareholder valuation: LG Electronics India

After setting the price band for its huge RS 11,607 CRORE IPO on RS 1.080-1.140 per share on Wednesday, LG Electronics India said that the original offer was “optimally priced” to ensure a long-term shareholder assessment.

The Indian arm of the conglomerate of Zuid -Korea also said that it wants to double the capacity after commissioning the third production facility in Sri City, Andhra Pradesh, in an investment of USD 600 million, in November next year.

“Our appreciation is a mix of market sentiments and our basic principles. We believe that it is very optimally priced and it will create a long-term appreciation for our shareholders,” said Sanjay Chitkara, Chief Sales Officer at LG Electronics India, in a media interaction after an IPO road show that is held here.

At the top, the company is appreciated at approximately RS 77,400 Crore.

The IPO will be opened for a subscription on October 7 and concludes on October 9, with Anchor Investor Bidding planning for October 6, the company said in a public announcement.

“We are proud supporters of the government of India’s make-in-India initiative. We are expanding local sourcing of raw materials and components, accelerating the use of automation and renewable energy Such as solar power, and establishing, andhhthdh Ju Jeon, Managing Director, LG Electronics India Ltd.stating That the Propose IPO Marks A Symbolic Step Forward, he confirms LG’s Non -offspring dedication to grow together with India, said that LG Electronics India currently offers more than 26,000 direct and indirect jobs. This will be the second South Korean company that applies the Indian stock market after the offer from Hyundai Motors India Ltd in October last year.

The IPO, fully an offer for sale (OFS) of 10.18 Crore shares, which represents around 15 percent interest, by the parent established in South Korea.

Since the public problem is completely an OFS, LG Electronics India does not receive IPO yield. The money raised goes to the South Korean parent.

LG Electronics India is a leading player in large household appliances and consumer electronics. The company’s products are sold to both B2C and B2B customers in India and abroad. It also offers installation, repair and maintenance services for all its products.

The company produces and sells products, including washing machines, refrigerators, LED TV panels, inverter air conditioners and microwaves. It has production units in Noida, Uttar Pradesh and Pune.

The company currently has a considerable capacity in its two factories. “We double it, and the span would be almost 5 years old, and by 2029 we expect our entire production lines to be operational from our third factory, Sri City,” said Chitkara.

The recent rationalization of the GST rates is a direct factor for the activities of the company, and it will lead to the growth and demand of his products in addition to premiumization, he added.

“Apart from this, it has improved the affordability of products, mainly the premium products. Customers with a limited disposable income within the same budget can therefore upgrade their products to even more premium products,” he noticed.

It will also create a chance for cross-selling, where the company could pitch two products to our consumers instead of one product, he said.

On the future question, Chitkara said that the company focuses on a massive and structurally growing economy where the TAM (total addressable market) is USD 41 billion, and it grows with a compound annual growth of 14 percent CAGR, according to an industrial report.

“Our products are strong under penetration, with only 4 percent of households with a microwave, 12 percent air conditioners and 21 percent washing machines. So there is a huge reach, if we compare it to other developed economies. We are already at 80-90 percent penetration and our products are just basics,” Chitkara.

He said that the company also switched to the production of super premium products on the domestic market, and premium products have consumption and demand in developed economies.

The company tries to increase the access of premium products to the Tier-2, Tier-3 cities in India, he noticed.

Chitkara said that exports at the company is currently good for 6 percent, which amounts to USD 160 million from the bottomline. In the past financial year it grew by 45 percent.

With LG present in 141 countries, the demand for his devices is growing internationally every year, and the parent wants to double the production pool to create an alternative production hub that becomes India.

“We are currently exporting to 46-47 countries, mainly Africa, the Middle East, Southeast Asia, but in the coming period we will certainly expand the number of countries, we will add some newer geographies and some newer product categories for our exports,” he said.

“We would not only add our new regions to the underdeveloped economies such as Southeast Asia, and this (the upcoming Andhra facility). We would add more to Europe and other developed economies,” said Atul Khanna, Chief Accounting Officer at LG Electronics India Ltd.

On the impact of the tariff problem, Chitkara said that these are some of the short -term challenges and LG, a more diversified company, is not influenced by the development, because the export exposure is not for the US.

“The basic principles of India are very strong despite all external issues, and India will remain a very robust consumption -based economy. We have a very large consumer base here, and the way in which the organization takes place and the middle class will expand, India remains a very strong economy for our products,” he said.