Lenskart's IPO Soars After Initial Setback

Post by : Bianca Suleiman

Lenskart shares experienced a thrilling debut on Monday, bouncing back from an initial drop to finish just above their IPO price, reflecting strong investor enthusiasm despite market fluctuations. The Indian eyewear giant secured ₹72.8 billion ($821 million) in a sale that quickly sold out, igniting conversation around its high valuation.

The stock opened at ₹395, below the IPO price of ₹402, dipping as much as 11% to ₹356.10 during the day. However, it recovered to close at ₹404.55, giving it an estimated valuation of around ₹702 billion ($8 billion). The IPO was met with significant demand, nearly 28 times oversubscribed, predominantly from institutional investors.

Established 15 years ago, Lenskart touts a vertically integrated business model that manages everything from manufacturing to retail. The company believes this strategy gives it an advantage over conventional optical chains and newer online competitors. Nevertheless, it confronts fierce competition from brands like Titan Eye+ and various direct-to-consumer entrants, prompting scrutiny over its speed of profitable expansion both in India and overseas.

Financially, Lenskart reported a profit for FY25 ending in March, with a revenue increase of 23% year-on-year to ₹66.53 billion ($750 million). The net profit reached ₹2.97 billion ($33 million), supported by a ₹1.67 billion ($19 million) accounting gain related to its Owndays acquisition. Excluding this one-time gain, core profit was roughly ₹1.30 billion ($15 million).

At the upper end of its IPO expectations, Lenskart aimed for a valuation of ₹700 billion ($7.9 billion), aligning it with India's most highly valued emerging consumer brands alongside Honasa and BlueStone. This valuation marked a 60% increase from last June's secondary share sale with late investors like Fidelity and Temasek. It suggests an approximate 230 times core net profit and 10 times revenue, spurring debates among retail investors.

CEO Peyush Bansal highlighted the company’s mission over its valuation during the IPO launch, asserting, “We didn’t build Lenskart to reach a valuation. We did it to reach people, from Delhi to the smallest towns of India.”

The funds from the IPO will enable Lenskart to enhance its retail footprint, fortify supply chains, invest in technology and marketing, and possibly pursue acquisitions. Existing investors, including SoftBank, Schroders Capital, Premji Invest, Kedaara Capital, and Alpha Wave Ventures, as well as co-founders and executives, offloaded parts of their stakes during the listing.

Lenskart’s IPO comes as a surge of Indian startups gravitates toward public offerings, spurred by a contraction in late-stage venture capital and increasing domestic investor interest. Other firms like Groww, Pine Labs, PhysicsWallah, Capillary Technologies, and BoAt are also gearing up for IPOs in the near future.