Why is LG Electronics share price down by 5% today?

Synopsis: The shares of LG Electronics are down by 5% in the Intraday trade on Thursday, January 8, and the stock has also been trading below its IPO opening price. In this article, let’s see the reason for the fall.

The shares of Large-Cap Company, specialising in innovative consumer electronics, home appliances, and mobile communications, offering a vast range of products, are in the spotlight as they have declined by 5 percent in the intraday trade. In this article, let’s explore the reason for the fall.

With a market capitalization of Rs. 95,547.40 Crores on Thursday, the shares of LG Electronics India Ltd declined upto 4.5 percent, reaching a low of Rs. 1392.80 compared to its previous closing price of Rs. 1457.70.

What Happened

LG Electronics India Ltd, engaged in innovative consumer electronics, home appliances, and mobile communications, offering a vast range of products, is in focus as it declined by 5 percent on Thursday, January 8, and the stock has also been trading below its IPO opening price.

Reason for the Fall

The company’s three-month shareholder lock-in period ends today. With the expiry of the lock-in period, approximately 15.2 million shares have become eligible for trading, accounting for roughly 2% of the company’s total outstanding equity. Nuvama Alternative and Quantitative Research notes that these shares represent a significant market value.

It is important to understand that the end of the shareholder lock-in does not mean these shares will automatically be sold in the market. The expiry only makes them eligible for trading, allowing shareholders the choice to buy or sell if they wish.

The stock experienced a substantial sell-off, accompanied by a notable surge in trading activity. On this day, the trading volume reached 4.16 M shares, significantly more than the recent highest volume of 1.52 M shares. This represents a sharp increase in market participation, suggesting heightened investor activity and possible strong reactions to news, earnings, or other market-moving events.

The stock was recently trading in the oversold zone, with the RSI below 30, indicating weakness. It is also positioned well below both its 10-day and 20-day moving averages, further suggesting a bearish trend.

The company’s revenue rose by 0.98 percent from Rs. 6,114 crores to Rs. 6,174 crores in Q2FY25-26. Meanwhile, Net profit declined from Rs. 536 crores to Rs. 389 crores in the same period.

The company demonstrates strong profitability with a 3-year average ROE of 36.5% and a current ROE of 45.2%, indicating efficient use of shareholder capital. Its ROCE of 56.8% further reflects the company’s ability to generate high returns from its overall capital, signaling operational excellence and robust financial performance. With a very low debt-to-equity ratio of 0.07, the company is almost debt-free, providing financial stability and flexibility for future growth.

LG Electronics India Ltd. (LGEIL) is the Indian subsidiary of South Korea’s LG Electronics, established in 1997, serving as a major manufacturer and distributor of consumer electronics, home appliances (refrigerators, ACs, washing machines), and B2B solutions (commercial displays, HVAC) with strong local production in Noida and Pune, focusing on innovation, quality, and a “Life’s Good” brand promise for Indian consumer.

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.

The post Why is LG Electronics share price down by 5% today? appeared first on Trade Brains.