Shares of LG Electronics India Ltd. gained up to 3% on Thursday, November 5, in response to its September quarter results, that were largely in-line to moderately higher compared to what the street had been anticipating. The company’s board has also approved a foray into a new line of business.
Revenue for the quarter increased by 19.5% from last year to ₹7,380 crore. The numbers were higher than the CNBC-TV18 poll of ₹7,069 crore.
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) for the quarter stood at ₹701 crore, which is marginally higher than the CNBC -TV18 poll of ₹663 crore. On a year-on-year basis, the company’s EBITDA grew by 27.9%.
EBITDA margin for the quarter expanded by 60 basis points from last year to 9.5% from 8.9% earlier. The figure is line with the CNBC-TV18 poll estimate of 9.4%.
Net profit for the period stood at ₹489 crore, in-line with the expectations of ₹486 crore. Profit increased by 27.5% from the same quarter last year.
New Business Foray From LG
LG Electronics India’s board has also approved a foray into a new line of business, namely the vehicle solutions business. The business will encompass manufacturing, assembling, importing, exporting, distributing, trading, selling, supplying, installing, integrating, servicing, maintaining and providing solutions relating to automotive and mobility technologies, products, components, systems and software.
The manufacturing of the products in this business category will take place at the company’s third plant in Sri City, Andhra Pradesh, according to the exchange filing.
How Will The New Business Benefit LG Electronics?
Expansion of the company’s business beyond its existing product offerings.
Access to emerging opportunities arising from increasing demand for connected vehicles, digital cockpits, advanced infotainment systems and intelligent mobility systems.
Opportunity to establish and strengthen the company’s presence in the automotive and mobility ecosystem in India.
Creation of additional business opportunities, potential revenue streams and long-term growth prospects for the company are some of the benefits listed by the company for foraying into the new business.
Investments in this business will be done in a phased manner based on the scale of operations, technology and equipment requirement, and prevailing market conditions, LG Electronics India said, without specifying the exact investment amount.
Shares of LG Electronics India surged to the day’s high after the results announcement, rising as much as 3.6% to ₹1,752.9. The stock is also nearing its post-listing high of ₹1,825.
LG Electronics India Q2 Results: Stock extends gains after earnings; Co approves foray into new business