LG India Might Lower IPO Valuation To $10.5 - $11.5 Billion Amid Stock Market Slump

One of the most anticipated initial public offerings of 2025, LG Electronics Inc.'s India unit, may lower its valuation compared to earlier estimates due to the recent downturn in the stock market, Bloomberg reported.
According to the report, the company is considering a valuation range of $10.5 billion to $11.5 billion, significantly lower than the previously estimated $15 billion. This adjustment comes as domestic market conditions remain volatile, impacting investor sentiment

Despite the lower valuation, sources familiar with the matter told the news agency that LG Electronics India could raise up to $1.7 billion from the IPO, which is more than initially expected.

LG Electronics India IPO Details

LG Electronics India has filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for its proposed IPO. The offering consists of a sale of 101.8 million shares by its South Korean parent company, LG Electronics Inc., representing approximately 15 per cent of its post-IPO paid-up equity share capital.
The estimated issue size stands at around $1.8 billion (Rs 15,237 crore), with a face value of Rs 10 per share. The IPO is expected to raise between $1 billion and $1.5 billion, giving the Indian arm an estimated valuation of around $13 billion. Following the IPO, the promoter's shareholding will decrease by 15 per cent, leaving LG Electronics Inc. with 57.69 crore shares in its Indian subsidiary.

In its filing, LG Electronics India stated that the IPO aims to enhance its brand image, improve market visibility, and create liquidity for its shares in the public market. The funds raised through the IPO will not be used for business expansion but will go directly to the parent company as it monetizes a portion of its investment in the Indian subsidiary.

The IPO is being managed by leading financial institutions, including Morgan Stanley, JP Morgan, Axis Capital, BofA Securities, and Citi.

Addressing The 'Korea Discount'

LG Electronics' decision to list its Indian subsidiary is partly aimed at addressing the "Korea discount," a term referring to the undervaluation of South Korean firms listed on their home stock exchanges. By going public in India, the company aims to improve shareholder value and gain a better valuation compared to its listing in South Korea.
If successful, LG Electronics India will become the second major Korean company to list on Indian stock exchanges, following Hyundai.

LG Electronics India's Financial Performance

LG Electronics India is a dominant player in the home appliances and consumer electronics industry. The company reported a 12.35 per cent increase in profit to Rs 1,511.1 crore for FY24, while its revenue from operations rose by 7.48 per cent to Rs 21,352 crore. These strong financials may help attract investor interest despite the ongoing stock market volatility.

The IPO's success will be closely watched as investors will be keen to see how LG Electronics navigates the market challenges and capitalizes on its strong foothold in India's consumer electronics sector.