Lenskart is not the only new-age listing whose sentiment was muted on debut. Paytm was one example, where the hype was big and delivered subdued returns to investors. Zomato, on the other hand, scripted a turnaround by clocking profits and better operational management and delivered multibagger returns to investors.
Here are the three things that analysts say Lenskart can do to mirror food delivery company’s story and reward investors.
Shivani Nyati, Head of Wealth at Swastika Investmart, said the company’s strengths lie in its vertically integrated model, in-house manufacturing, aggressive store expansion, and data-driven supply chain.
Its premium brand perception, subscription-based revenue stream (Lenskart Gold membership), and rising penetration in Tier-II and Tier-III markets have positioned it as a category leader in India’s fast-growing organized eyewear market.
Sustainable profits
However, to regain investor confidence, it will have to prove that it can deliver sustainable profits, balance growth with capital efficiency, and justify its lofty valuations.
Lenskart finally turned profitable last year, Rs 297 crore profit on Rs 6,600 crore revenue. “It’s a solid comeback from losses, but investors want proof that it wasn’t just a lucky year. The market rewards consistency, not one-off wins,” said Ishan Tanna, Research Analyst, Ashika Equity Research.
Focused growth
The company already has over 2,700 stores across India and abroad, which is impressive, but analysts say now the spotlight is on how efficiently those stores perform.
“Expanding is easy, but expanding profitably is what counts. Especially in new markets like the Middle East or Southeast Asia, where the learning curve is steep,” Tanna said.
Margin improvement and higher operating leverage
Analysts have flagged that while Lenskart’s topline growth (32.5% CAGR over FY23–25) is impressive, its EBITDA margin of around 14.7% and its dependence on operating leverage make it vulnerable to cost pressures.
Ambit Capital sees a store potential of around 5k stores for Lenskart in India. “The ability to gain share from unorganized market will drive productivity improvement,” it said.
“While domestic store-level EBITDA margins for matured stores is over 30%, international operations and corporate drag company level margins to 5.7%. If Lenskart can manage better operating leverage and improving store vintage globally, this will drive margin improvement of 450/465 in India and international operations over FY25-28E,” the brokerage said.
Overall, Nyati says investors allotted shares may consider holding for the medium to long term, supported by earnings visibility and expanding store footprint, with a stop loss around Rs 350 and Short-term traders may exit the position and look for better opportunities elsewhere.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)