Lenskart’s Rs 7,278 crore IPO drew robust interest, with the issue subscribed 28 times overall, led by qualified institutional buyers (45x), while retail and non-institutional investors’ quotas were also fully booked.
However, its debut was far from euphoric. The listing followed a week of volatility in the grey market, where the stock’s premium, once as high as Rs 108, collapsed to zero, reflecting growing unease over near-term gains despite heavy subscription.
Analysts said the underwhelming start mirrored valuation concerns, as Lenskart priced its IPO at a steep 10.1x EV/Sales and 68.7x EV/EBITDA for FY25—multiples higher than even global eyewear peers. Despite healthy demand, the IPO’s high valuation raised questions about its ability to deliver meaningful listing gains, analysts noted.
High valuation, thin margins
Lenskart’s FY25 financials painted a picture of strong topline growth but modest profitability. The company reported Rs 6,652 crore in revenue, up 32.5% year-on-year, and a net profit of Rs 297 crore, which included a one-time gain of Rs 167 crore from its Owndays acquisition. Adjusted for this, normalised profit stood around Rs 130 crore, translating to a thin net margin of under 2%.
Its EBITDA margin improved to 14.7%, helped by operating leverage as the company expanded into Singapore, the Middle East, and Southeast Asia.
Brokerages warn of stretched valuations
Brokerage Ambit Capital, in a report dated November 7, initiated coverage on Lenskart with a “Sell” rating and a target price of Rs 337, implying a 16% downside from the IPO price.
“The implied 55x FY28 EV/EBITDA multiple for India operations is 15–30% above Trent and Nykaa despite much lower return ratios,” the brokerage said, calling the pricing “unwarranted.”
Ambit said that while revenue is expected to grow roughly 20% CAGR over FY25–28, Lenskart’s capex-heavy model, thin free cash flows, and low RoCE (~9%) limit upside. “With capex of around Rs 20 billion over FY25–28, free cash flow will turn positive only by FY28,” the brokerage noted.
The brokerage also cautioned that premium valuations ignore lower capital efficiency, with RoCE/RoIC projected at 9%/13% versus peers’ 35–40%.
Also read | Lenskart shares make muted D-St debut, list at 3% discount to IPO price
Despite the subdued debut, analysts said Lenskart’s fundamentals make it a structural long-term play in India’s Rs 50,000 crore eyewear market, where organised retail penetration remains low. The company’s omnichannel presence, digital-first strategy, and centralised manufacturing model provide scalability, though profitability remains the key monitorable.
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