Lenskart Solutions

IPO Size: Rs. 7,278 cr

• Fresh Issue of Rs. 2,150 cr (i) Rs. 591 cr rent for existing stores (ii) Rs. 273 cr capex for new stores (iii) Rs. 213 cr for technology (iv) Rs. 320 cr brand building
• Offer for Sale (OFS) of Rs. 5,128 cr – 20% OFS by the promoters (20% stake to shrink to 18%) and balance by 15 investors - Shrodders (complete exit), Softbank, Temasek, Kedaara, Alpha Wave among others

Price band: Rs. 382-402 per share

• A promoter recently sold shares to Mr. RK Damani and SBI Mutual Fund at Rs. 402 per share, worth Rs. 190 cr

M cap: Rs. 69,741 cr, implying 10.4% dilution

• 75% for institutions and 10% retail, as company reported loss for FY23 and FY24

IPO Date: Fri 31^st Oct to Tue 4^th Nov 2025, Listing Mon 10^th Nov 2025

Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.

 

India’s Largest Eyewear Retailer

Lenskart is a 17 year old eyewear retailer, with 2,800 stores in India and Asia (Japan, South East, Middle East), selling 27 million eyewear to over 12 million customers. FY25 revenue of Rs. 6,600 cr is split 60:40 between India and international, with international clocking 75% gross margin (63% India gross margin) as well as higher EBITDA too, due to average realization being 3.5x internationally vis-à-vis India.

 

But EBITDA is a Wrong Profit Parameter

Lenskart is a manufacturer-cum-retailer, hence proforma FY25 EBITDA of Rs. 1,116 cr (17% margin) under IndAS is a deceptive profit parameter, excluding two important expenses - store rent and depreciation. Instead, EBIT under I gaap or, in absence, PBT excluding other income must be considered, as debt on books is just at Rs.500 cr while other income was at Rs. 359 cr, comprising treasury profit of Rs. 1,850 cr cash.

 

Poor Margins

For FY25, proforma PBT excluding other income stood at Rs. 100 cr or 1.5% of topline. Company has undertaken some financial engineering here, including profit of a company Stellio, acquired on 11^th Aug 2025, in last fiscal’s FY25 proforma financials. Wonder how’s that even permitted! Excluding Stellio’s FY25 PAT of Rs. 32 cr, 1.5% margin would be even lower.

Q1FY26 revenue stood at Rs. 1,894 cr, with PBT, excluding Rs. 52 cr other income, at Rs. 58 cr, or 3% of topline. Q1FY26 proforma revenue stood at Rs. 2,030 cr, with net profit of Rs. 81 cr, including Rs. 22 cr ‘notional’ profit from Stellio.

There remain many unexplained items, with Stellio’s revenue surging to Rs. 135 cr, in Q1FY26 from Rs. 272 cr in FY25, and net margin expanding to 16% from 12% in FY25. Thus, 3% ‘core business’ margin of Q1Y26 is ‘yet-to-be-established’.

 

Low Margin, despite Scale and Technology

Eyewear is a high gross margin industry, with selling price being 3-4x cost. Hence, even unorganised players enjoy healthy profits, operating on ‘low volume high value’ model.

Lenskart clocks 68% gross margin and its technology-enabled backward integration ensure cost to be 35%-40% lower than industry. Despite this, margin remains wafer-thin. In contrast, Titan’s eyewear division, with 1/8^th topline of Lenskart, at Rs. 800 cr, clocks 10% segmental margin in FY25.

Even its own Aug 2025 acquisition of Spanish online retailer Stellio, reported 12% net margin on Rs. 270 cr topline, by just trading in sunglasses. All this questions Lenskart’s business model, besides apprehensions on the long wait for ‘operating leverage to kick-in’, even after 2,800 stores in operation and Rs. 6,500 cr topline.

Other not-so-trivial concerns remains, such as half the raw material procurement from China and India realisation dropping in past 3 years, to Rs. 1,740 per eyewear, as of Q1FY26.

 

Fresh Issue for Opex, not Capex

Only 50% of current manufacturing capacity is utilised. Yet company is establishing a Rs. 1,000cr+ greenfield plant in Hyderabad. This capex is not part of Object of IPO. Instead, operating expense such as rent for existing stores, technology, marketing etc. is earmarked from IPO.

If company is cash surplus Rs.1,850 cr, why not allocate funds for operating expenses and later use for capital expenditure, which can wait. Thus, fresh issue proceeds are structured, merely to avoid IPO being an entirely OFS issue.

 

Stretched Pricing

It will be foolish to value Lenskart on revenue or EBITDA multiple, due to factors stated above. Q1FY26 proforma PBT excluding other income stood at Rs. 75 cr, whereas Q1FY26 proforma PAT was at Rs. 81 cr, which includes Rs. 52 cr as treasury profit. Thus, for simplicity sake, annualising Q1FY26 PAT leads to FY26E estimated profit of about Rs. 325 cr. This discounts expected market cap of Rs. 69,740 cr by a PE multiple of 215x. This multiple is ridiculously high and double that of even Avenue Supermarts’ 100x or Trent’s 105x, both being large retailers, with an established track record of clocking 4-8% net margin, for many years now.

 

Promoter Greed?

In Jul 2025, founder Peyush Bansal bought shares from existing investors at Rs. 52 per share to increase stake in company to 10.2%, raising his ‘skin in the game’. After 3 months, he is partly cashing out via OFS, which is so contradictory. One wonders the rush to not wait for 18 more months, when building a visionary long term business!

Moreover, erstwhile promoter-group company Dealskart Online Services, now merged with Lenskart, held master franchise of retail stores, when Lenskart itself is a retailer. All this indicates some level of promoter greed and possible neglect of minority shareholder interest, post listing.