Lenskart Stock Debuts Below IPO Price
Lenskart, India's leading omni-channel eyewear retailer, recently made its market debut, listing its shares at ₹395, slightly below the IPO price of ₹402. The company had high hopes for its public offering, with expectations driven by significant investments from notable figures like SBI Mutual Fund and Radhakishan Damani. Despite strong demand, concerns regarding the valuation shadowed its debut.
The IPO was oversubscribed by 28.3 times, indicating robust interest, particularly from institutional investors. Qualified Institutional Buyers (QIBs) showed a remarkable subscription rate of 40.35 times, while retail investors also demonstrated considerable interest. However, the excitement was tempered by worries about the high price-to-earnings (PE) ratio of 230, which many believe is inflated.
On its opening day, Lenskart's shares initially fell by 11% before recovering slightly, trading around 2.5% lower than the issue price. The stock's performance sparked discussions among investors, especially considering the comparison to the Paytm IPO fiasco in 2021, where high expectations similarly resulted in disappointing outcomes.
Lenskart plans to utilize the funds raised from the IPO for various strategic initiatives, including opening new company-operated stores across India. This move aligns with the growing demand for eyewear, particularly as issues like worsening eye health among children become more prominent. The company aims to tap into India’s expanding $10 billion eyewear market.
Interestingly, Lenskart reported revenues of ₹6,653 crore for FY25 along with its first profit margin of ₹297 crore. This financial turnaround, coupled with the increasing need for accessible eyewear solutions, places Lenskart in a unique position within the market. However, the initial market response raises questions about investor confidence and the sustainability of such high valuations in the long term.
As Lenskart continues to navigate these challenges, its ability to balance growth with prudent valuation will be critical in determining its future success in the competitive eyewear landscape of India.
