Lenskart’s valuations are way too high and the stock could see a sharp correction, says Dharmesh Kant

Eyewear retailer Lenskart’s lukewarm listing has sparked debate among investors and analysts. Despite being oversubscribed by more than 20 times, the stock opened weaker, surprising many on Dalal Street. According to Dharmesh Kant, Head of Equity Research at Cholamandalam Securities, the problem lies not in business fundamentals but in excessive IPO prices.“The surprise is that despite the 20-fold subscription, the listing did not take off. The valuations were already too high,” Kant told ET Now.

Far too high valuations, Kant warns

Kant noted that while Lenskart is a strong brand with good management and a dominant market share, its current valuation leaves little room for upside potential.”It is a 15-20 year old company with only 4-5% market share. Even with 20% revenue growth and 15% margins, PAT for FY30 would be around ₹1,000 crore – implying a forward price-to-earnings ratio of almost 70x,” he said.

At this level, he believes the stock is still overvalued and has issued an ‘Avoid’ rating.

Strong Business Weak Pricing: The IPO Paradox

Kant drew parallels with other high-profile stock market listings, saying: “Good companies can go bankrupt because of bad prices.”

Competition from Jio Frames could put pressure on growth

Kant warned that the entry of Reliance’s Jio Frames could disrupt the eyewear market in the coming years.

“Reliance is a mass market disruptor. Once Jio Frames is launched, it will challenge Lenskart’s pricing,” he said.

Even if the stock corrects by 50%, Kant says it still won’t be an immediate buy, citing the need to reassess growth once competition intensifies.

IPO valuations need a reality check

Kant believes the broader IPO market has tilted too far toward aggressive pricing, leaving little value for retail investors.

“To keep the IPO market healthy, issuers must price their offerings sensibly. Investors must see value on listing day, not just hype,” he said.