However, the Street has become more cautious about the valuation concerns, a factor that may now be weighing on sentiment. At the top end of the price range of Rs 402 per share, the IPO valued Lenskart at a steep FY25 EV/EBITDA multiple of over 50x, much higher than established listed peers in the consumer and retail space.
Adding to the pressure, brokerage Ambit Capital initiated coverage with a ‘Sell’ rating just before the listing, citing high valuations and modest yield ratios.
“We expect Lenskart to deliver 20% revenue CAGR in FY25-28, led by India’s expansion and increasing global scale. However, at an EV/EBITDA of 55x FY28, the stock trades at a 15-30% premium to Trent and Nykaa, despite a lower RoCE of 9% compared to peers’ 35-40%,” Ambit said. It set a target price of Rs 337, which indicates a downside of around 16% from the issue price.
While the company has delivered strong top-line growth, revenues rose 32.5% to Rs 6,653 crore in FY25, while part of the Rs 297 crore profit in FY25 came from a one-time gain of Rs 167 crore linked to the Owndays acquisition. Adjusted for this, normalized profit drops to Rs 130 crore, which translates into a net margin of just 1.96%. Analysts say while Lenskart’s long-term story remains compelling, driven by its leadership in India’s underpenetrated eyewear market and omnichannel strategy, the stock’s short-term prospects look bleak.
If stock prices remain flat, it would reflect a cooling of sentiment that had previously pushed gray market trading to frothy levels. However, long-term investors may still try to hold on given the company’s structural growth potential in the growing Indian eyewear and optics market.
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