LG Electronics, Polycab among Khemka picks amid uneven demand

Siddhartha Khemka, head of research for wealth management at Motilal Oswal Financial Services, has identified LG Electronics and Polycab as stock picks, assigning price targets of Rs 2,075 and Rs 10,600 respectively. In an assessment published by Economic Times Markets on October 18, he cited demand for premium appliances and infrastructure investment as growth drivers, even as India's festive consumer recovery remains uneven.

The targets and earnings projections are Khemka's investment views, not assured outcomes. His assessment distinguishes strong sales in selected categories from a wider revival in household discretionary spending.

Festive sales improve, but replacement demand stays weak

Khemka's account describes a slow opening during Ganesh Chaturthi and Pitru Paksha, followed by an improvement around Navratri, when sales grew 25–30% year-on-year. The gains, however, were concentrated rather than spread evenly across appliances.

Air-conditioner volumes rose more than 60% year-on-year in recent weeks, helped by higher temperatures. That weather dependence leaves uncertainty over how long the surge can continue. Selected premium television categories recorded volume growth of 60–100%, partly because of a low comparison base and buyers moving to larger screens.

Affordability remains a constraint. Television prices increased 22–25% amid shortages of panels and limited chip availability, discouraging some replacement purchases. Smartphone volumes were estimated to have fallen 10–15%, while average selling prices climbed 35–40%, reflecting both price increases and a shift towards more expensive devices. Higher sales values therefore do not necessarily indicate that more units are being bought.

Refrigerators and washing machines faced softer demand as households postponed purchases or repaired existing appliances. The reported exchange ratio at retail counters fell to about 12%, from roughly 30% a year earlier, signalling weaker replacement activity.

Manufacturers are using zero-cost instalment plans, cashback and dealer incentives to encourage purchases. Khemka also identified product availability, distribution reach and after-sales support as competitive factors. Outside mainstream appliances, he cited reported chimney-market growth of 40–50%, increased adoption of modular kitchens and interest in energy-efficient BLDC fans.

LG Electronics: premium products and localisation

Khemka's Rs 2,075 target for LG Electronics rests on its spread across home appliances, air-conditioning solutions and home entertainment. He sees premiumisation, in-house compressor manufacturing and expanding business-to-business operations—including heating, ventilation and air conditioning systems and information displays—as supporting growth.

The assessment says LG's export network now reaches 61 countries. Its upcoming Sri City facility is expected to increase local manufacturing and deliver benefits from greater scale; these are anticipated gains rather than completed outcomes.

According to the account, management remains confident of maintaining growth of around 20%. Washing machines and televisions are expected to contribute in the second half of FY27, while premium products and replacement purchases are expected to support refrigerators and air conditioners.

For FY26–FY28, Khemka projects compound annual growth of 13% in revenue, 30% in earnings before interest, tax, depreciation and amortisation (EBITDA), and 32% in profit after tax (PAT). These forecasts are separate from the broader growth trajectory attributed to management.

Polycab: infrastructure demand supports the outlook

For Polycab, Khemka's Rs 10,600 target follows what his account describes as a strong second quarter of FY27. Revenue increased 53% year-on-year and EBITDA rose 44%, with domestic cables and wires growth of about 50%. He linked the performance to infrastructure, real estate and industrial demand, alongside distribution execution and favourable realisations.

Management is targeting growth at 1.5 times the industry's rate in that context. Khemka also pointed to export orders and data-centre opportunities as potential sources of continued demand.

In fast-moving electrical goods, revenue reached 2.2 times its year-earlier level, led by solar inverters. The segment's earnings before interest and tax (EBIT) margin widened by 9.6 percentage points to 10.1%, marking its seventh successive profitable quarter. Management's FY30 ambitions include growth at 1.5–2 times the industry rate and an EBITDA margin of 8–10%; that EBITDA target is a different measure from the reported EBIT margin.

A new extra-high-voltage plant is due in the first quarter of FY28. Across FY26–FY28, Khemka estimates compound annual growth of 24% each in revenue and EBITDA, and 23% in PAT.

The two recommendations draw on different demand drivers: LG's case centres on product mix, manufacturing and appliances, while Polycab's relies more heavily on construction, industrial investment and electrical infrastructure. Neither outlook removes the affordability pressures evident in the wider consumer market.