BofA sees structural growth opportunity in Lenskart; initiates with 'Buy'

Global brokerage firm BofA Securities has initiated coverage on eyecare solutions provider Lenskart Solutions with a Buy rating, citing the company’s continued expansion in the underpenetrated eyewear category across India and select international markets. 

According to analysts Aditya Mathur, Pritesh Sonar and Arashi Nishizawa, Lenskart’s scalable and integrated operating model—underpinned by technology—differentiates it from peers. They added that strong execution, improving customer metrics and healthy unit economics continue to drive robust performance. 

Amidts this, Lenskart shares were trading at ₹525 apiece, up 0.22 per cent from the previous close at 10:55 AM on Monday, June 1, on the NSE. 

BofA analysts have forecast a 23 per cent/39 per cent/46 per cent revenue/EBITDA (pre-IndAS 116)/earnings CAGR over FY26–28E, which they believe supports the stock’s premium valuation. They see a long growth runway and have assigned a DCF-based price objective of ₹575 (Mar-28E; WACC = 10.8 per cent, g = 5 per cent), implying an upside of 9.52 per cent from current market levels.

 

Lenskart addressing large vision correction gap

According to BofA, prescription eyewear remains highly underpenetrated, with around 50 per cent of Indians requiring vision correction, but only 35 per cent of them actually using it. This gap, they said, stems from fragmented and complex supply chains, along with diagnostic and access bottlenecks.

 

Lenskart’s vertically integrated, tech-enabled model—spanning design, manufacturing, supply chain and omnichannel retail—is helping address these structural constraints while expanding the category, the analysts noted.  READ | Monsoon worries? Amol Athawale of Kotak Securities picks 3 stocks to watch

 

They further highlighted that international markets, including Japan, Southeast Asia and the Middle East, which account for roughly 42 per cent of revenue and 25 per cent of profit, present additional growth avenues by addressing similar market gaps.

Integrated model and tech-led advantage

BofA underlined that Lenskart has built a scalable integrated model that creates a structural advantage. Centralised design, sourcing and manufacturing enhance product quality, affordability and assortment cycles, while asset-light stores function as experience and order-booking points.

 

“Technology and specifically AI underpins execution across the business, enabling demand creation and lowering cost to serve; use cases include store expansion (GeoIQ), diagnostics (remote optometry), operations (Tango Eye), customer experience (virtual try-ons, personalisation, fast delivery), et al. Customer metrics remain strong – NPS now >80,” wrote the analysts in a research note.

Growth visibility and earnings trajectory

BofA noted that growth is largely volume-driven across both entry/value and premium segments. With over 2,600 stores and 120 million app downloads, Lenskart is already among India’s largest retail brands across categories. However, it still holds only about 5 per cent share in an underpenetrated market, leaving significant headroom for expansion.

 

The brokerage highlighted that store payback periods are less than one year, with new store unit economics in smaller towns performing even better. It added that the model is replicable internationally, where profitability trajectory appears slightly stronger than in India.  READ | NMDC Steel zooms 18%, hits 52-week high on posting strong Q4 results

  Overall, strong growth coupled with operating leverage is expected to drive healthy margin expansion—estimated at +300 bps to 14 per cent pre-IndAS Ebitda by FY28E, with a long-term aspiration of 25 per cent.

 

“A strong balance sheet (further strengthened post IPO) supports investments in stores, capacity and tech, while delivering healthy FCFs. Key risks: slower growth (either due to external, or brand / execution issues), deterioration in unit economics or technical factors like stake sale, etc,” said the analysts.

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