The Lenskart initial public offering (IPO) subscription period commenced today and will run until November 4th. The price range set by the company is between Rs 382 and Rs 402 per share, with a lot size of 37 shares for retail investors.
The total size of the issue amounts to about Rs 7,278 crore, with approximately Rs 2,150 crore designated as a fresh issue, while the remaining portion constitutes an offer for sale by existing shareholders.
In the unofficial market, Lenskart is presently commanding a grey market premium of around Rs 70, indicating an anticipated listing gain of approximately 17% at the upper end of the price range. However, it is essential to understand that the grey market premium reflects sentiment rather than certainty, and can fluctuate rapidly with market conditions.
Lenskart has emerged as India’s largest organized eyewear retailer by successfully integrating a robust online presence with an expanding network of offline stores. The brand has gained recognition in both major cities and smaller towns, which is where it envisions its next phase of growth.
For the fiscal year 2025, the company reported revenues of around Rs 6,652 crore and a net profit of Rs 297 crore, marking a significant turnaround following a period of losses.
A significant portion of the fresh funds raised will be utilized for store expansions, enhancing supply chain capabilities, and further investment in technology-driven retail and branding initiatives. Lenskart is also intensifying its international endeavors, particularly in the Middle East and Southeast Asia.
Despite the buzz surrounding the IPO, there are concerns regarding valuation. Investors are being asked to pay a premium for future potential rather than proven profitability. The recent profit surge includes one-time accounting adjustments, prompting investors to look for consistent earnings growth in the upcoming quarters to validate the turnaround. The company’s vertically integrated supply chain offers efficiency advantages but also poses risks of dependency.
Swastika Investmart has adopted a neutral stance on the IPO, citing steep valuation levels that imply high earnings and revenue multiples, leaving little room for disappointment. It highlights that the current profit figures are influenced by non-cash gains and may not entirely reflect operational strength.
On the flip side, Swastika acknowledges that Lenskart operates in a sector with substantial growth opportunities. With millions of Indians either not using eyewear or opting for unbranded alternatives, Lenskart has successfully established a strong brand presence in this underserved segment.
The involvement of seasoned investor Radhakishan Damani provides additional credibility and long-term assurance for some investors.
The decision to subscribe or skip the IPO depends on individual strategies. Those eyeing quick listing gains may find the grey market premium enticing, but market dynamics in the upcoming week will be decisive. Long-term investors may find the growth narrative appealing, backed by a robust brand and clear expansion strategy, albeit at a price that anticipates flawless execution in the future.
In essence, this IPO is not a bargain opportunity but rather a premium investment in the scale, branding, and future prospects of organized eyewear retailing in India. While it holds potential for returns, they are likely to materialize over the long term rather than in the short run.