Will Lenskart’s Rs 7,278 Crore IPO Deliver Long-Term Vision for Investors?
Lenskart Solutions, a growing eyewear retailer, is set to launch a significant IPO, aiming to raise ₹2,150 crore through a fresh issue and an additional ₹5,128 crore through an offer for sale. This funding will support its expansion into new stores, enhance cloud infrastructure, boost brand marketing, and facilitate acquisitions. However, investors face critical questions regarding the company’s long-term vision and financial stability.
Overview of Lenskart’s Business Operations
Founded in 2008, Lenskart has become a formidable player in India’s eyewear market, which commands a 4-6% market share. As per the Redseer report, Lenskart was the leading seller of prescription eyeglasses in India by sales volume in FY25. The company boasts manufacturing facilities in Bhiwadi and Gurugram, augmented by regional hubs in Singapore and the UAE. The recent growth in store numbers is noteworthy; the company added 847 stores since FY23, bringing the total to 2,806 (2,137 in India and 669 abroad).
Financial Performance and Challenges
Lenskart’s revenue surged by 32.5% annually to ₹6,652.5 crore, with EBITDA growing by 93.4% to ₹971.1 crore, resulting in an EBITDA margin increase from 6.9% to 14.6% between FY23 and FY25. The company, however, reported a net profit of ₹297.3 crore in FY25, primarily driven by one-time gains, contrasting sharply with the net loss of ₹63.8 crore in FY23.
Key financial metrics include:
– Lease liabilities: rose to ₹1,701.2 crore from ₹1,087.6 crore.
– Interest outgo: increased to ₹145.9 crore from ₹83.3 crore, reflecting 83.6% of EBIT in FY25.
– P/E ratio: currently high at 235 due to past losses.
Lenskart operates in a highly competitive market, where the unorganized segment constitutes 77% of the industry, presenting both opportunities and challenges.
Investor Considerations
As Lenskart’s IPO approaches, investors may prefer to wait for clearer financial signals post-listing before making decisions. The high P/E ratio coupled with steep lease costs and high-interest payments raises concerns about future profitability.
Conclusion
Lenskart’s ambitious IPO could represent a significant development for investors keen on the eyewear market. While the company showcases robust sales growth and an aggressive expansion strategy, potential investors should weigh the financial challenges against the backdrop of a promising yet fragmented market. Ultimately, the true test will be whether Lenskart’s long-term vision translates into consistent profitability in the years to come.