Lenskart lists flat after volatile debut; valuation debate lingers

Eyewear retailer Lenskart's stock fluctuated sharply on listing day, ending nearly unchanged as investors weighed its steep valuation and long-term growth potential

Eyewear retailer Lenskart, whose rich valuation polarised investor opinion ahead of its initial public offering (IPO), made a choppy debut on the bourses on Monday, ending the day with marginal gains.

 

The stock opened at ₹390, a 3 per cent discount to the issue price of ₹402, and slid as much as 12 per cent in early trade. 

 

It later rebounded to hit an intraday high of ₹413.8 — up 3 per cent from the issue price — before settling at ₹403.3, a muted 0.3 per cent gain over the IPO price.  

 

The SoftBank-backed company closed its first session with a market capitalisation of ₹69,967 crore. 

 

The IPO had stirred discussion over its lofty valuation, pegged by some analysts at about 215 times annualised first-quarter FY26 earnings. The pricing drew criticism from several quarters and even prompted at least one institutional investor to publicly defend its stance.

 

Ambit Capital initiated coverage on the company with a ‘sell’ rating, citing stretched valuation metrics.

 

The brokerage expects Lenskart’s revenues to expand about 20 per cent annually between FY25 and FY28, supported by expansion in domestic and overseas markets.

 

Ambit estimates capital expenditure of about ₹2,000 crore over FY25–28, which could keep free cash flows negative until FY27. 

 

While the firm acknowledged Lenskart’s strong growth prospects and potential for margin improvement, it maintained that the stock’s current valuation leaves limited upside.

 

“Despite 40 per cent of revenues coming from higher-margin international markets, the company’s wafer-thin profitability and limited benefits of scale make the IPO appear expensive,” said Geetanjali Kedia, senior research analyst at SPTulsian.com. 

 

“Consumer companies often excite investors, but they must be viewed from a shareholder’s perspective. A few months ago, the IPO pricing looked investor-friendly; a recent rally in secondary markets, however, has pushed valuations close to perfection. This is leaving little on the table for new investors,” she added. 

 

Despite the uproar over its valuations, Lenskart’s IPO had garnered strong response, getting subscription of 28.3 times and cumulative bids of over ₹1 trillion.