Lenskart's IPO Surges After Initial Fluctuations

Lenskart's shares experienced a notable debut on Monday, recovering from an initial downturn to finish just above their IPO price, reflecting robust investor enthusiasm amidst market uncertainty. The Indian eyewear company garnered ₹72.8 billion ($821 million) in a quickly sold-out listing, igniting discussions over its high valuation.

Initially opening at ₹395—below the IPO price of ₹402—the stock dropped to a low of ₹356.10, a decline of about 11%. However, by market close, it rebounded to ₹404.55, giving the company a valuation of approximately ₹702 billion ($8 billion). The IPO saw overwhelming demand, with subscriptions nearly 28 times oversubscribed, largely driven by institutional participation.

Established 15 years ago, Lenskart operates a vertically integrated model, managing everything from production to retail, which it claims provides an advantage over traditional optical retailers and emerging online rivals. Nevertheless, it faces stiff competition from names like Titan Eye+ and new direct-to-consumer brands, raising questions about its growth trajectory and profitability in both domestic and international markets.

Financially, Lenskart reported a profit for the fiscal year ending March FY25, with revenue increasing by 23% year-over-year to ₹66.53 billion ($750 million). The net profit reached ₹2.97 billion ($33 million), supported by a ₹1.67 billion ($19 million) accounting gain linked to its acquisition of Owndays. Excluding this one-off gain, the core profit amounted to around ₹1.30 billion ($15 million).

At its IPO peak, Lenskart aimed for a valuation of ₹700 billion ($7.9 billion), joining the ranks of India's most highly valued new-age consumer entities such as Honasa and BlueStone. This valuation marked a 60% increase from last June's secondary share sale with late-stage investors like Fidelity and Temasek, reflecting a valuation of roughly 230 times core net profit and 10 times revenue, sparking debate among retail investors.

During the IPO launch, Lenskart CEO Peyush Bansal stressed the company's core mission rather than valuation, stating, “We didn’t build Lenskart to reach a valuation. We did it to reach people, from Delhi to the smallest towns of India.”

The funds raised from the IPO will support Lenskart's efforts to enhance its retail footprint, fortify supply chains, invest in technology and marketing, and potentially explore acquisitions. Current investors, including SoftBank, Schroders Capital, Premji Invest, Kedaara Capital, and Alpha Wave Ventures, along with co-founders and executives, also divested portions of their stakes as part of this public offering.

Lenskart’s IPO coincides with a surge of Indian startups aiming for public market entry, driven by a contraction in late-stage venture funding and a growing interest from domestic investors. Companies like Groww, Pine Labs, PhysicsWallah, Capillary Technologies, and BoAt are also gearing up for public offerings in the upcoming months.