Upcoming IPOs - LG Electronics India & HDB Financials

Overview of LG Electronic IPO & HDB Financial IPO 

LG Electronics India 
South Korea’s LG Electronics Inc., which has a strong global presence including in the United States, is planning to list its Indian subsidiary, LG Electronics India Pvt Ltd, with Initial Public Offering (IPO) that could raise $1 to $1.5 billion. This will value the Indian unit at approximately $13 billion. The company has engaged major global banks, including Bank of America, Citigroup, JPMorgan Chase, & Morgan Stanley, as lead arrangers for the offering. LG may file prospectus with the Securities & Exchange Board of India (SEBI) as early as next month, with the listing expected in 2024.

HDB Financial 
HDB Financial Services, prominent non-banking financial company (NBFC) & subsidiary of HDFC Bank, is gearing up for its much-anticipated Initial Public Offering (IPO). The offering will feature fresh equity issuance amounting to ₹ 2,500 crore, complemented by Offer-for-Sale (OFS) portion. The OFS will allow existing shareholders to divest part of their stakes, presenting great opportunity for potential investors to get stake in one of India’s leading NBFCs.

Business Overview 

LG Electronic 
LG Electronics India Pvt Ltd is wholly-owned subsidiary of LG Electronics Inc., South Korean conglomerate, & one of the largest electronics manufacturers in the world. The Indian unit has significant market presence, operating in segments like Consumer electronics, Home appliances, HVAC (Heating, Ventilation, & Air Conditioning), IT hardware.

HDB Financials
Incorporated in 2007, HDB Financial Services has firmly established itself in India's financial landscape, with over 1,680 branches spread across the country. The company provides wide range of secured & unsecured loans, offering financial products like personal loans, business loans, vehicle loans, & loans against property. It has become vital player in the retail & commercial segments, delivering asset finance solutions to small businesses & individuals alike.

Operational & Financial Efficiency 

LG Electronic
The IPO marks LG's commitment to long-term growth in India. The local subsidiary has maintained efficient operations, focusing on product innovation & adapting to consumer trends. In FY23, LG Electronics India reported:
- Revenue growth of 17%, reaching ₹20,111 crores.
- Profit after tax (PAT) increased by 14% to ₹1,345 crore.

HDB Financial
HDB Financial Services is renowned for its prudent lending practices & robust risk management framework, which have helped it maintain strong loan book & impressive financial growth over the years. 
- The company recorded 17% year-on-year growth in its loan book for FY23, reaching ₹ 66,000 crore, driven by high demand for personal, vehicle, & business financing. 
- The company reported net profit of ₹ 1,740 crore for FY23, underscoring its solid financial position.

Why consider investment in an Upcoming IPO?

LG Electronic
Investors looking for long-term growth in India's consumer sector may find LG's IPO appealing. The company is likely to use the capital to boost product innovation, expand its market presence, & solidify its leadership position. However, potential investors should also consider the market competition & external economic factors that could impact growth. The IPO market in India continues to thrive, with companies like Hyundai Motor India also planning large-scale offerings. The robust economic fundamentals & growing investor confidence signal favourable environment for capital raising. With the increasing demand for consumer electronics in India across various devices such as mobile, desktop, and tablet, LG Electronics India is well-positioned to capitalize on the growing market and plans to channel IPO funds into expanding its product portfolio.

HDB Financials
The IPO is partly driven by the Reserve Bank of India's (RBI) mandate that requires "Upper Layer" NBFCs to list on stock exchanges by September 2025. The listing of HDB Financial Services will also align the company with regulatory frameworks for large NBFCs, promoting greater transparency & governance. This move mirrors similar steps taken by other financial entities, such as Bajaj Housing Finance, which recently made successful stock market debut.

Growth Prospect of the Upcoming IPO

LG Electronic 
India’s consumer market is growing, & LG Electronics India is well-positioned to capitalize on this momentum. The company has well-established brand & has been investing in local manufacturing capabilities, aligning with the Indian Government’s Make in India initiative. Key growth drivers include: Rising disposable income & increasing demand for home appliances & consumer electronics. Expansion into rural markets, where the demand for basic appliances is growing. Technology advancements: LG is focusing on integrating smart technology & energy-efficient products, which are in high demand due to environmental concerns. The IPO will help LG bolster its market share by channelling funds into research & development & expanding its product portfolio.

HDB Financials
With the ongoing growth in India's NBFC sector & the increasing demand for retail & business financing, HDB Financial Services is positioned to capitalize on future opportunities. The company’s well-diversified loan portfolio, combined with strong growth in its loan book, makes it potential favourite among investors seeking exposure to the financial services sector. The company’s nationwide reach, encompassing over 1,680 branches, will further bolster its growth trajectory post-listing.

Upcoming IPO Details

HDB Financial IPO Details  

- Fresh Issue: ₹ 2,500 crore
- Offer for Sale (OFS): portion of shares held by existing shareholders.
- Expected Valuation: Between $7 billion & $8 billion.
- Expected Listing: By December 2024 or before the end of FY25.

LG Electronic IPO Details

The listing date, price range and issue size is to be announce.

Why Go for Upcoming IPO?

LG Electronic
1.    Strong international assistance helps LG India succeed in the Indian market by utilizing its worldwide resources and technological prowess.
2.    Due to its reputation for high-quality products, durable goods, and customized advertising, LG India has a devoted following of customers.

HDB Financial
1.    The IPO is partly driven by the Reserve Bank of India's (RBI) mandate that requires "Upper Layer" NBFCs to list on stock exchanges by September 2025.
2.    Parent Company, HDFC Bank holds significant 94.64% stake in HDB Financial Services, making it the primary beneficiary of this IPO.

Conclusion  

As HDB Financial Services prepares for its IPO, it is poised to attract significant investor interest, given its robust growth record & parentage under HDFC Bank. The IPO will provide investors opportunity to buy into thriving NBFC at time when demand for personal & business loans continues to surge in India. With potential valuation of $7–8 billion, the offering is expected to become one of the most anticipated IPOs of the financial year. The IPO of LG Electronics India Pvt Ltd is set to be one of the most significant listings in the consumer electronics sector. The company’s solid financial performance, operational efficiency, & strong brand positioning make it attractive opportunity for investors seeking exposure to India’s growing middle class & rising demand for premium consumer products.