Lenskart IPO: The Good, the Bad and the Ugly

Eyewear company Lenskart is in the midst of one of the most anticipated public offers this year. 

Founded in 2008, the company has grown at a rapid pace to over 2,000 retail stores in India and a valuation of $7.7 billion. Its showrooms prominently stand out as a rare new-age brand in urban centres.

According to reports, Lenskart's early and growth stage investors like SoftBank, Kedaara Capital, KKR, Premji Invest and Temasek are expected to clock multibagger returns in the IPO.

However, as has been the case with a raft of new-age public issues in the past few years like Zomato, MamaEarth, Paytm, Ola Electric and others, there’s no dearth of market watchers and analysts who find the IPO valuation eye-watering. 

A comment by an X user summed up the sentiment: “₹70,000 crore for 2,600 stores,  that’s ₹27 crore per outlet. Bhai, yeh chashme bech rahe hain ya diamond lenses (are they selling lenses made of diamond)?” Another noted that ‘if Peyush Bansal pitched Lenskart’s valuation to Shark Tank’s Peyush Bansal, he’d get rejected.”

For context, Lenskart turned profitable in FY25 with a profit of ₹297 crore, but its proposed ₹70,000 crore IPO valuation gives it a high price-to-earnings (P/E) ratio of around 237.

The discussion has inevitably drawn comparisons with other high-profile consumer-tech listings. Paytm, for instance, went public in November 2021 at ₹2,150 a share, only to lose over 75% of its value within a year as investors questioned its profitability and business model. 

Nykaa, which went public in 2021, also saw its stock price soar on debut but later slipped over 70% as growth cooled and valuations corrected. Similarly, Ola Electric, one of the most high-profile IPOs of 2024, has seen its shares plunge from a post-listing high of Rs 150 to Rs 51 at present. Lenskart’s case may not be identical, but it does echo similar themes, high expectations, stretched valuations, and one-time accounting gains that inflate short-term profitability. 

In this context, it is instructive to examine whether Lenskart is another, hyped up start-up with a yet-to-be-proven business model, or a chance to get in on the ground floor into a promising bet on India’s fast-growing modern retail story. We get into the weeds.

Valuation Worries

Let’s first look at the valuation. Companies in this space generally trade at around 80–110× their forward earnings on the Indian bourses. For instance, Trent Limited, which currently trades at ₹4,712.30, has a P/E ratio of 110.4, while Titan Company Limited trades at ₹3,765.50 with a P/E ratio of 89.7. The IPO pitches Lenskart at around 230–240x  its FY25 earnings. 

It’s worth noting, however, that Lenskart has no direct comparable peer, as it is among the few new-age companies operating in the eyewear retail segment. Moreover, a start-up that has just started making profit cannot be subjected to the same PE analysis as a more established chain like Titan, which are at a different stage in their growth cycle. 

However, say analysts, even if Lenskart triples its profits in the next few years, the P/E ratio would still be around 70x. The issue even led to a few users tagging the Securities and Exchange Board of India (SEBI) over Lenskart’s sharp valuation jump, from ₹8,700 crore in July to ₹70,000 crore in October. 

Varun Joshi, Director and Head of Research, GoalFi, linked the valuation to the current

“IPO frenzy”. “There’s no disqualification for such pricing if the market is willing to pay, but the risk is that post-listing correction is very likely. Lenskart has great growth prospects, especially with its international expansion, but the entry point for investors looks expensive,” he said.

However, founder and CEO Peyush Bansal brushed off such concerns, claiming that he was not involved in determining the value of his company: “I don’t understand valuation. I understand the value for consumers, which my team and I focus on creating. Valuation is done by advisers,” he told CNBC-TV18.

A Long Term Story

On the optimistic side, there are those who point out that the company represents a ‘long term’ opportunity, and cannot be judged on the basis of its current financials, but on future projections.

SBI Securities acknowledges that while Lenskart’s valuation looks stretched and listing gains may be limited, it argues that the company’s strong business model and growth potential in India’s underpenetrated eyewear market make it a solid long-term story. “As the business scales up, there is scope of improvement in profitability over the medium to long term…

“Essentially, the issue is discounting about two years of forward performance. Unless the company exceeds expectations, say, delivering ₹1,500–2,000 crore profit by FY28,  the upside from current levels could be limited. In short, it’s a long-term story where sustained execution will justify the valuation,” says Sunny Aggarwal, Head of Fundamental Equity Research Team, SBI Securities Ltd.

Strong Manufacturing Edge

One of Lenskart’s biggest advantages is that it owns and operates its own manufacturing facilities instead of outsourcing production. Besides being the largest eyewear retailer in India, it is the third largest global manufacturer of eyeglasses.

In FY25, nearly 70% of all prescription eyeglasses sold by the company were made in its own plants in Bhiwadi (Rajasthan) and Gurugram (Haryana). These two centers cater to both Indian and international markets.

The Bhiwadi plant, in particular, plays a key role in Lenskart’s operations. According to the company’s filings, it is among the world’s top two vertically integrated eyewear manufacturing facilities, with 75% of its operations automated. 

“The company’s fully backward-integrated model, from manufacturing frames and lenses to direct delivery, allows it to offer quality eyewear at 25–30% lower prices than competitors. If Lenskart continues delivering this value proposition, it’s well-positioned to scale its business both domestically and globally, strengthening its case for long-term investors,” says Aggarwal. 

Overseas business driving growth

Lenskart is one of the few Indian consumer brands that has successfully gone global. In FY25, its international business brought in ₹2,638 crore, which made up almost 40% of its total revenue.

The company began its international journey in 2019 by entering Singapore with a website and a single store. Since then, the company has expanded across nearby regions, especially Southeast Asia, Japan, and the Middle East. The acquisition of Owndays, an eyewear brand in Japan and Southeast Asia, in August 2022 helped Lenskart strengthen its presence in these markets. 

As of March 2025, Lenskart had 2,723 stores worldwide, including 656 outside India. Its global presence covers Japan, Southeast Asia, the Middle East, and Oceania, showing steady expansion. 

However, some experts highlight that they are more optimistic about the revenue coming from India. 

“Around 40% of its revenue now comes from overseas markets like Japan, Southeast Asia, and the Middle East. But we must remember that while this is strong, the bigger growth potential lies in India. The demographics here, young population, growing middle class, are much more favourable. Japan, for instance, has an ageing population, so long-term growth there may be limited,” says Kranthi Bathini,  Director - Equity strategy, WealthMills Securities Pvt ltd.

Red Flags

Besides the obvious concerns around valuation, investors have also expressed worries about some other aspects of the company and its financials.

The first is related to the nature and sustainability of its profits. After reporting losses for two years, Lenskart finally turned profitable in FY25. The company posted net profit of ₹297.3 crore in FY25 after sustaining losses of ₹64 crore in FY23 and ₹10 crore in FY24.

However, most of this profit did not come from its main eyewear business. A large part came from “other income”, which grew by about 96% ( from ₹182 crore in FY24 to ₹357 crore in FY25). For context, other income refers to the money a company earns from sources outside its regular business operations. 

According to Lenskart’s DRHP, this jump in other income was mainly because of two one-time gains. First, the company booked a profit of around ₹167 crore from a fair value adjustment related to its earlier acquisition of Owndays, a Japanese eyewear brand. This means the company revised upwards the worth of that investment and recorded a one-time accounting gain. 

Another  ₹72.6 crore came from the company’s mutual fund investments.

In short, while Lenskart reported a healthy profit in FY25, much of it came from one-time financial gains and investment-related income, not from its main eyewear business operations.

When these exceptional items are stripped out, analysts estimate that the company’s core or normalised earnings fall to around ₹130 crore. This means that at its proposed market value, investors are paying about 535 times its normalised profit. 

Many observers have noted a common pattern among new-age tech companies going public. “The template is always the same,” wrote Vaibhav Jain, Founder of Capital Quill, on LinkedIn, “ just a few quarters before the IPO, they will do some financial engineering to show they have become profitable. The media will pick up their latest numbers and say the company is profitable.”

He explained that these start-ups first raise money from well-known early investors and later bring in big private equity funds to further boost their valuations. Despite this, many of them continue to make losses,  even as their revenues grow rapidly. 

Exit to Investors 

The second area of concern is around the utilization of funds. Nearly 70% of Lenskart’s IPO proceeds will go towards existing shareholders of the company, rather than to the company itself. In other words, only about 30% of the funds raised will be available to fund the company’s growth.

While this is not unusual for PE- and VC-funded start-ups going public, investors should note that the IPO is largely designed to help existing investors—including founder Peyush Bansal—liquidate their holdings, rather than to bring in substantial new capital for business expansion. Bansal is selling around 1.2% of his 10.28% stake in the company, netting him around ₹820 crore. His stake will fall to 9.08% after the IPO. Total promoter shareholding, including those of Peyush Bansal, Neha Bansal, Amit Chaudhary and Sumeet Kapahi, will stand at around 18%. 

Experts say some dilution is normal, but if the promoter’s stake drops below 10%, it could be seen negatively as it reduces their “skin in the game” or personal commitment to the company.

“When the promoter’s holding falls below 10%, it raises concerns about long-term commitment and alignment with shareholders. A low stake means less personal financial interest in the company’s future performance. Additionally, when promoters or large investors have smaller holdings, there’s a higher chance of share supply in the market whenever prices rise, creating what’s called a “supply overhang.” This can put pressure on the stock price,” says Rajnish Mehan, Executive Director and Chief Investment Strategist at Prudent Asset India Pvt. Ltd.

Rising Costs

Besides the nature of the company’s profitability, there are also concerns around rising costs, specifically employee expenses, which jumped 51.42% in FY24 to ₹10,864.91 million. During the same period, revenue from operations increased by 43.12% to ₹54,277.03 million, up from ₹37,880.28 million a year earlier, while the number of outlets expanded 1,959 in FY 23 to 2,389 in FY24. 

The company’s DRHP states that it aims to “deepen and broaden our store network in India through continued omnichannel expansion, enhancing our presence across Metropolitan, Tier 1, and Tier 2+ cities.”

However, Mehan, said the number was not unusual for a retail chain. “Lenskart’s employee cost accounts for roughly 25% of its total expenses, which is reasonable for a consumer-facing retail business with hundreds of physical outlets. As the company continues expanding in India and overseas, this cost will naturally rise in absolute terms. However, with revenue growth keeping pace, employee cost as a percentage of sales is likely to remain stable, with only marginal variations,” he added. 

Overall, the Lenskart IPO—like those of other recent digital-focused start-ups—requires the investor to have a good understanding of the business the company operates in and a higher-than-usual risk tolerance and patience. For those willing to bet on the company’s promise—and business model—the offer represents a chance for long-term gains, but there is a high chance that the investor will have to strap in for a volatile ride as the company is still in its hyper growth stage and profitability may fluctuate.