In 2012, the World Health Organization revised treatment guidelines for childhood pneumonia with lower chest wall indrawing (LCWI) but no 'danger signs', to recommend home-based treatment. We analysed data from children hospitalized with LCWI pneumonia in the Pneumonia Etiology Research for Child Health (PERCH) study to identify sub-groups with high odds of mortality, who might continue to benefit from hospital management but may not be admitted by staff implementing the 2012 guidelines. We compare the proportion of deaths identified using the criteria in the 2012 guidelines, and the proportion of deaths identified using an alternative set of criteria from our model. PERCH enrolled a cohort of 2189 HIV-negative children aged 2-59 months who were admitted to hospital with LCWI pneumonia (without obvious cyanosis, inability to feed, vomiting, convulsions, lethargy or head nodding) between 2011-2014 in Kenya, Zambia, South Africa, Mali, The Gambia, Bangladesh, and Thailand. We analysed risk factors for mortality among these cases using predictive logistic regression. Malnutrition was defined as mid-upper-arm circumference <125mm or weight-for-age z-score <-2. Among 2189 cases, 76 (3·6%) died. Mortality was associated with oxygen saturation <92% (aOR 3·33, 1·99-5·99), HIV negative but exposed status (4·59, 1·81-11·7), moderate or severe malnutrition (6·85, 3·22-14·6) and younger age (infants compared to children 12-59 months old, OR 2·03, 95%CI 1·05-3·93). At least one of three risk factors: hypoxaemia, HIV exposure, or malnutrition identified 807 children in this population, 40% of LCWI pneumonia cases and identified 86% of the children who died in hospital (65/76). Risk factors identified using the 2012 WHO treatment guidelines identified 66% of the children who died in hospital (n = 50/76). Although it focuses on treatment failure in hospital, this study supports the proposal for better risk stratification of children with LCWI pneumonia. Those who have hypoxaemia, any malnutrition or those who were born to HIV positive mothers, experience poorer outcomes than other children with LCWI pneumonia. Consistent identification of these risk factors should be prioritised and children with at least one of these risk factors should not be managed in the community.