Lenskart Solutions Limited. (Neutral)

Highlights

Lenskart Solutions Limited (Lenskart) incorporated in 2008, is a technology-driven eyewear company with integrated operations spanning designing, manufacturing, branding and retailing of eyewear products. They primarily sell prescription eyeglasses, sunglasses, and other products such as contact lenses and eyewear accessories.

Lenskart caters their customers with various brands and sub brand such as (i) Owndays (ii) John Jacobs (iii) Vincent Chase (iv) Lenskart Air (v) Hustlr (vi) Hooper. In 2023, they made a minority investment in Le Petit Lunetier, a French eyewear brand, and introduced it in Lenskart stores in India in the Financial Year 2025. In addition to the above brands, Lenskart also offer customers the option of purchasing eyewear products of select third-party brands.

Lenskart operate stores across a range of formats, including company-owned and company-operated (CoCo), franchisee-owned and franchisee-operated and company-owned and franchisee-operated. Which includes 2,137 retail stores spread across 1.73 million square feet in 415 cities in India and 669 retail stores spread across 0.69 mn s.q.ft. outside of India.

Out of the total proceeds of approximately Rs. 72,780 mn, ~Rs. 8,640 mn would be utlizied for funding CAPEX towards set-up of new CoCo stores in India. ~Rs. 2134 mn would go towards in technology and cloud infrastructure. Rs. 3201 mn would go towards brand marketing and business promotion expenses for enhancing brand awareness. ~Rs. 7525 mn would be utilized towards unidentified inorganic acquisitions and general corporate purposes and ~Rs. 51280 mn would go towards existing selling shareholders of the company.

Key Highlights

• With a CAGR of ~13 pct between FY25 and FY30P, the eyewear market in India is projected to expand at ~1.5x the rate of the overall retail market in India and 3x faster than global eyewear market during the same period and projected to reach ~Rs. 1,483 bn (~USD 17.2 bn) by FY30P, from ~Rs. 788 bn (~USD 9.2 bn) in FY25.
• The company own and operate frame and lens design and prescription eyeglasses manufacturing facilities at 2 locations in India in Rajasthan and Haryana, supplemented by regional facilities in Singapore and the United Arab Emirates. This centralized manufacturing and controlled supply chain in India has allowed them to deliver quality prescription eyeglasses at affordable costs and enable next day delivery.
• They built a scalable and replicable model by investing in technology solutions, AI tools and automation across customer engagement, supply chain and post order fulfilment, retail store operations and internal business functions. These capabilities enable them to deliver an enhanced customer experience and drive operational efficiency at scale.
• Lenskart’s omnichannel model allows customers to seamlessly purchase, collect, receive or return products across any of their touchpoints. This enables them to scale their operations while efficiently investing in marketing efforts. In India, their adjusted same-store sales growth (SSSG) and same-pincode sales growth (SPSG) was 15.67 pct and 20.54 pct, respectively, in the FY25.
• Lenskart’s key strategies includes (i) Increase markets’ penetration and, expand customer access across channels (ii) Strengthen manufacturing and supply chain capabilities (iii) Continue to innovate and expand product portfolio (iv) Invest in new technologies (v) Continue to enhance customer experience and strengthen brand across markets.
• Sales of the company has grown by 32.5 pct CAGR over FY23-25 and EBITDA grew by 93.4 pct CAGR over same period. During FY25 the sales of the company grew by 22.6 pct YoY to Rs. 66,525 mn. While EBITDA of the company increased by 44.5 pct YoY to Rs. 9,711 mn and EBITDA margin expanded by 220 bps bps YoY to 14.6 pct in FY25. During FY25, the company posted profit of Rs. 2,973 mn against loss of Rs. 102 mn.  

Key Risk

• Medical advancements in the eyecare industry may adversely affect the demand for Lenskart’s eyewear products.
• Errors or inaccuracies in eye examinations conducted by their vision care professionals could adversely affect their reputation and business.
• The eyewear industry in India is largely unorganized, which exposes Lenskart to competition from a fragmented base of smaller retailers and may affect their business.
• In last few years 2 CFO’s of the company has resigned, if new CEO resigned within short period of time, it can impact company’s reputation.

Financial Performance

Valuation

Lenskart is India’s largest technology-driven direct-to-consumer eyewear brand, designing and selling prescription glasses, sunglasses, and accessories. It operates 2,800+ global stores, with a strong omnichannel (online and offline) presence. The company controls its entire supply chain, ensuring high quality and affordability. Lenskart also serves markets in Japan, Southeast Asia, and the Middle East. At the upper end of the price of Rs. 402, the issue quotes PE of 284.9x on FY25E post issue annualized earnings. The issue appears to be fully priced.

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