Lenskart shares make muted D-St debut, checklist at 3% low cost to IPO worth
The itemizing comes after every week of volatility within the gray market, the place the inventory’s premium — as soon as as excessive as Rs 108, crashed to zero simply earlier than debut, signaling uncertainty over near-term features regardless of sturdy investor subscription.
The Rs 7,278 crore IPO acquired a strong response from buyers, being subscribed 28 instances total. Certified institutional patrons (QIBs) led the cost, subscribing 45 instances, whereas the non-institutional investor and retail parts have been booked a number of instances as effectively.
Regardless of wholesome demand, the IPO’s excessive valuation raised questions on its skill to ship significant itemizing features, a sentiment that in the end performed out in its flat or modest debut efficiency.
On the higher worth band, the difficulty was valued at FY25 EV/Gross sales and EV/EBITDA multiples of 10.1x and 68.7x, considerably greater than even established international friends.
Nevertheless, Lenskart’s dominant place in India’s organized eyewear retail market, sturdy model recall, and enhancing margins may make it a structural long-term story.Ambit Capital initiated protection on Lenskart earlier this week with a “Promote” ranking and a goal worth of Rs 337, implying a 16% draw back from the difficulty worth. The report highlighted that whereas Lenskart’s topline is predicted to develop round 20% CAGR over FY25–28, its capex-heavy mannequin, skinny free money flows, and low returns on capital (RoCE of ~9%) make its valuation troublesome to justify.”The implied 55x FY28 EV/EBITDA a number of for India operations is 15–30% above Trent and Nykaa regardless of a lot decrease return ratios,” the word mentioned, calling the pricing “unwarranted.”
Lenskart’s monetary efficiency earlier than the IPO had proven sturdy income development however modest profitability. In FY25, the corporate reported Rs 6,652 crore in income, up 32.5% year-on-year, and a internet revenue of Rs 297 crore, helped partly by a one-time acquire of Rs 167 crore from its Owndays acquisition.
Adjusted for this, normalized revenue stood round Rs 130 crore, translating to a skinny internet margin of underneath 2%. The corporate’s EBITDA margin improved to 14.7% in FY25, reflecting operational leverage because it expanded globally throughout Singapore, the Center East, and Southeast Asia.
Analysts say that whereas the corporate’s sturdy omnichannel presence, digital-first technique, and centralised manufacturing present scalability, buyers shall be carefully watching margin development and profitability tendencies within the coming quarters.
The long-term thesis stays intact, however valuations have already priced in loads of the expansion, mentioned most brokerages and that the following leg of rerating will rely upon execution, not sentiment.
At itemizing, Lenskart’s market cap stood round Rs xx crore. Whereas early buyers could also be disenchanted by the dearth of itemizing fireworks, analysts keep that the corporate’s long-term alternative in India’s Rs 50,000 crore eyewear market, coupled with rising penetration of organized retail, makes it a gentle however affected person wager for long-term buyers.
Because the mud settles on the debut, the market’s focus will shift to quarterly efficiency. Whether or not Lenskart can justify its steep valuations by sustained margin growth and international scale-up will decide if the inventory can finally provide buyers the “clear imaginative and prescient” they have been hoping for.
