LG India Now Worth More Than Its Korean Parent After Blockbuster Listing
LG Electronics India Ltd. surpassed the market capitalisation of its South Korean parent, as it listed with a premium of over 50% at the Dalal Street on Tuesday. The scrip closed 48.2% higher at Rs 1,689.9, after opening at Rs 1,710.1, well above the issue price of Rs 1,140. This surge gave the company a market valuation of about $13 billion, outpacing both its own $8.73 billion IPO target and the roughly $9 billion market value of its parent company.
Riding High on India’s Booming Consumer Demand
Riding high on India’s booming consumer demand, LG’s initial public offering was bolstered by policy support, including recent tax cuts on appliances like refrigerators and televisions, as well as a dovish stance from the Reserve Bank of India, which is expected to keep growth conditions favourable for the near term. To learn more about the impact of Reserve Bank of India policies on the market, check out our article on monetary policy.
The Listing: A Strongest for a Billion-Dollar IPO in India Since 2021
The listing, hailed as the strongest for a billion-dollar IPO in India since 2021, coincides with the country’s festive season, notably a peak period for consumer spending, and comes amid a bullish primary market, where fundraising is on track to surpass last year’s record $20.5 billion. For more information on IPOs in India, visit our Indian stock market section.
“Consumption is where LG has gotten a better response compared to other IPOs that are currently in the market,” said Deven Choksey, managing director at DRChoksey FinServ, in a statement to Reuters. To stay updated on the latest IPO news, follow our stock market news section.
Outshining Other High-Profile Listings
LG’s IPO launched around the same time as two other high-profile listings — Tata Capital and WeWork India — but outshone both in demand and post-listing performance. While LG’s IPO was fully subscribed within hours, racking up bids worth nearly $50 billion, Tata Capital rose a modest 1.4% on debut, and WeWork India fell 3%. For more information on Tata Capital and WeWork India, visit our company news section.
“After a long time, we’re seeing a genuinely strong IPO in the consumer space — solid fundamentals, reasonable valuations and sector-leading growth prospects,” said Dhiraj Relli, CEO of HDFC Securities. To learn more about consumer space and its growth prospects, check out our article on sector analysis.
Fueling Investor Optimism
Fueling investor optimism is LG’s commitment to scale its India operations. The company has begun construction on its third manufacturing plant in the country, a $600 million facility that aims to transform India into a global export hub for the brand’s appliances. To stay updated on the latest manufacturing news, follow our industry news section.
The IPO was a pure offer-for-sale issue, with the parent firm offloading 15% of its stake to raise capital, as it seeks to defend its margins in core TV and appliance segments facing stiff competition from Chinese manufacturers. For more information on Chinese manufacturers and their impact on the market, visit our global market trends section.
Investor appetite was strong across the board. Qualified institutional buyers subscribed to 166.5 times their quota, while non-institutional and retail investors subscribed 22.4 times and 3.54 times, respectively. To learn more about investor appetite and its impact on the market, check out our article on market trends.
Following the successful debut, at least five brokerages initiated coverage on LG Electronics India, with price targets ranging between Rs 1,700 and Rs 1,800. For more information on brokerage coverage and its impact on the market, visit our stock market analysis section.