Lenskart shares up 2%; Motilal Oswal starts 'Buy', sees long growth runway

Motilal Oswal cited Lenskart Solutions' superior growth profile, limited organised competition, and long growth runway, for reasons on coverage initiation

Lenkskart Solutions shares rose 2.3 per cent in trade, logging an intra-day high at ₹493 on BSE. At 9:37 AM, Lenskart Solutions' share price was trading 2.09 per cent higher at ₹491.75 per share. In comparison, BSE Sensex was down 0.01 per cent at 82,491.14.  Motilal Oswal Financial Services has initiated coverage on Lenskart Solutions with ‘Buy’ for a target of ₹600 per share, citing the company’s superior growth profile, limited organised competition, and long growth runway. The target price implies 24.5 per cent upside from the previous close at ₹481.7. 

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The brokerage said eyewear remains structurally underpenetrated in India despite large latent demand—highlighting that around 53 per cent of the population is impacted while prescription eyeglass penetration is estimated at 35 per cent. It added that Lenskart has built defensible advantages through:

 

• Centralised, automated manufacturing and logistics
• Backward integration (in-house frames and lenses) that provides a cost edge
• An omnichannel network of 2,439 stores across 435 cities in India and 705 stores internationally, alongside its mobile app
• Technology-enabled scaling of eye tests and store rollouts, supporting strong store economics (about 33 per cent store-level pre-Ind AS Earnings before interest, tax, depreciation and amortisation (Ebitda) and a 10-month payback)
• A house-of-brands approach spanning mass to premium segments

Large addressable market; expansion opportunity across India and overseas

The brokerage estimated Lenskart’s total addressable market across its existing geographies at ₹2.3 trillion+, with a market share of about 5 per cent in India and more than 2 per cent internationally, indicating significant headroom.

 

For India, it expects 27 per cent pro forma revenue CAGR over FY25–FY28 led by volume growth and accelerated store additions, projecting Lenskart’s India market share to rise to 8.3 per cent by FY30 from 5 per cent in FY25. Internationally, it anticipates 22 per cent revenue CAGR with profitability improvement led by better store throughput and calibrated expansion.  ALSO READ | ICICI Prudential AMC gets new 'Buy' from Antique on 'superior execution'

Growth outlook

Motilal Oswal expects Lenskart to deliver a pro forma consolidated revenue compound annual growth rate (CAGR) of 25 per cent and a pre-Ind AS Ebitda CAGR of 53 per cent over FY25–FY28, driven by volume growth, improving product margins and an estimated 625 basis points (bps) operating leverage-led margin expansion over FY25–FY28 (with 320 bps expected from 9MFY26 to FY28).

 

It added that free cash flow (FCF) may remain constrained in the near term due to upfront capex, particularly for the upcoming Hyderabad facility, but expects FCF conversion to improve materially beyond FY28 to about 65–70 per cent of pre-Ind AS Ebitda.

Valuation

The brokerage values Lenskart Solutions using a discounted cash flow (DCF) approach, implying 55x FY28E EV/pre-Ind AS Ebitda, and argues the premium is justified given Lenskart’s growth profile, limited organised competition in eyewear and scope for sustained margin expansion.

Key risks

Risks flagged include dependence on China for raw material imports, concentration of manufacturing operations in North India, loss-making overseas subsidiaries diluting profitability, and shortage of trained optometrists.

 

Disclaimer: View and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers discretion is advised.