The nearly₹7,300-croreIPO of Lenskart Solutions will be open till November 4. The eyewear retailer, with integrated operations — spanning manufacturing to retailing — in India and international markets, has set an IPO upper-band price of ₹402 per share. This values the company at ₹69,912 crore or a sky-high 235 times PE or 72 times EV/EBITDA multiples.
The elevated valuation considers the high growth of the company with FY23-25 revenue and EBITDA growth of 32.5 per cent/92.3 per cent CAGR. The company should sustain the growth momentum with store growth and expanded manufacturing operations. But the company has a capital-intensive operation with store leases and large manufacturing base. We recommend investors wait and watch for comfort in valuations and growth trajectory after the IPO.
The IPO consists of an offer for sale (OFS) of ₹5,128 crore and a fresh issue of ₹2,150 crore. The OFS portion includes promoter offering of ₹1,095 crore. The fresh issue proceeds will be utilised for new stores (₹272 crore), lease and rents (₹591 crore), technology (₹213 crore), brand and marketing (₹320 crore) and the remaining (₹752 crore) for unidentified inorganic opportunities.
It is important to note that the promoter acquired shares from institutional shareholders in July this year at around ₹52 per share, which is a significant 80 per cent discount to the IPO price/valuation. According to the management, this was done to bolster the promoter shareholding. While the stakeholders involved in transaction might have had their reasons, it needs to be noted that such transactions are unusual and the valuation difference with IPO price is stark.
The company operates through its 2,806 stores (June 2025), of which 2,137 are in India and 669 stores are in Japan, South-East Asia (including Singapore) and West Asia. The international segment accounts for 39 per cent of FY25 revenues — ₹6,652 crore. Lenskart has its manufacturing facility in Bhiwadi, Rajasthan, and Gurugram, Haryana, which undertake lens manufacturing, edging, design, frame design, frame manufacturing and delivery to the store.
Growth levers
The 32.5 per cent revenue CAGR in the last three years was driven by store-count growth. Stores increased from 1,416 to 2,067 in India (21 per cent CAGR) and from 543 stores to 656 stores in the international segment (10 per cent CAGR).
The company should sustain the store-count growth with 300- 400 store addition in India and 50-60 addition in international markets, aided by the omni-channel approach, strong cash flows and fresh issue proceeds, and tech back-up for new store locations.
First, compared to the largely-unorganised eyewear market and even large organised retailers in India, Lenskart’s online and offline presence allows multiple touch-points for customers where they can utilise a blended approach for viewing the online catalogue and making the purchase (offline or online). In FY25, 45 per cent of Indian revenues was engaged digitally and 40 per cent shipped directly. The tech platform developed by Lenskart also aids in optimal prospective store location as well. This is reflected in the average 10-month payback period for stores.
The company reported cash flow from operations of ₹1,230 crore in FY25, aided by the strong growth in margins. Supplemented by the fresh issue proceeds, Lenskart should drive the store count growth. However, a closer look at the earnings mix shows that nearly a third of FY25 profit before tax came from treasury income on surplus cash rather than core operations, indicating that the quality of earnings is still evolving.
In the growth phase of the company, the store profile is younger with increasing utilisation, which should support revenue growth as well in the medium term. India and International segments witnessed customers per store growth of 4 per cent and 20 per cent CAGR in FY23-25. The company reported a same-store sales growth of 16 per cent in FY25 as well, which reiterates the maturing profile of the stores.
Lenskart realisations in FY25 were flat, as the management is focused on volume-driven growth and increasing its market share. Overall, the company should drive 20 per cent revenue growth in the next two years, aided primarily by store-count growth in India and international markets. The strong tech platform and healthy financials should support growth.
Margin scope
The EBITDA margins for the two segments (as shown in the table) expanded owing to the operational leverage and integrated operations.
The eyewear retail market is largely dependent on third-party imports of frames and lenses. Around 50 per cent of Lenskart’s products are designed, manufactured and assembled in one central location. For the rest, the lenses or frames are outsourced, but finished and packaged at its facilities.
The management states that this allows it to price the eyewear 35-40 per cent lower than the unorganised retail price. For unorganised retailers, imports from China or Europe, the national and regional distributors, and wholesalers and the final retailer, the multiple parties in the supply chain inflate the trade price by 2-3 times the trade price for the customer. With an integrated supply chain from basic raw material to the consumer that includes a fully-automated plant and three-day delivery to even far-away stores, Lenskart can compete on price effectively. The company is in the process of setting up a larger facility in Hyderabad and has signed a memorandum in 2024.
Valuation
While the growth in revenues and scope for margin expansion is strong, the high capital intensity of the manufacturer-retailer with leased store operations can impact the profitability.
The company has consistently reported depreciation charges of average 12 per cent of sales in the last three years. This compares to EBITDA margin of 15 per cent in FY25. With stores on lease, this is structural and will be impacting the EPS. Even as the charge is non-cash, the company has a capital-intensive operation. This can be inferred from the 0.6-times sales to total asset base compared to 1.3- 2.4 times for DMART, Titan and Vishal Mega Mart.
The premium valuation at 235 times EPS and 72 times EV/EBITDA is at a 20 per cent premium to DMART (99 PE and 58 EV/EBITDA) and Titan (89 PE and 62 EV/EBITDA), which are themselves highly valued but with a strong track record of operations.
Published on November 1, 2025
