Lenskart shares recover after falling as much as 12% on trading debut

Shares of Lenskart Solutions made their much-anticipated debut on Dalal Street at a discount of 3% to the issue price on Monday, November 10, marking a subdued market debut for the eyewear retailer amid concerns over stretched valuations.

The stock opened at ₹395 on the National Stock Exchange (NSE), lower than the issue price of ₹402. On the BSE, it listed at ₹390, down 2.98%.

Shares of Lenskart fell as much as 11% in the first few minutes of their trading debut on Monday. The stock has since rebounded over 12% from its opening lows to climb back above the ₹400 mark.

Lenskart's grey market premium (GMP), which earlier stood at ₹95, implying potential listing gains of around 24% when the issue opened for subscription, had collapsed ahead of the debut, signalling a muted listing despite the IPO's strong response.

Shivani Nyati of Swastika Investmart recommended that investors who were allotted shares consider holding them for the medium to long term, supported by strong earnings visibility and an expanding store footprint, with a suggested stop-loss around ₹350.

She added that short-term traders may consider exiting the position and look for better opportunities elsewhere.

Lenskart's ₹7,278-crore IPO saw robust investor participation during its three-day bidding window between October 31 and November 4, with the issue being subscribed over 28 times.

The strong response was led by institutional investors, with the QIB category subscribed 45 times, while non-institutional investors and retail participants subscribed 18.23 times and 7.54 times, respectively. The employee quota was also fully taken up, subscribed 4.96 times.

The company aimed to raise funds through a fresh issue of ₹2,150 crore and an offer for sale of 12.75 crore shares.

Priced in the range of ₹382-₹402 per share, the issue values Lenskart at about ₹70,000 crore.

Proceeds will go toward expanding retail operations, strengthening technology infrastructure, and enhancing marketing initiatives.

Valuation debate

Several analysts have raised concerns about Lenskart's steep valuation, which translates to a price-to-earnings (P/E) ratio of around 230 times.

In an interview with CNBC-TV18, Lenskart CEO Peyush Bansal addressed the valuation debate. CNBC-TV18 pointed out that even if the company were to triple its profits over the next few years, its P/E would still hover near 70, a level considered expensive by market standards.

Bansal, however, underscored the company's 90% EBITDA CAGR and the long-term potential of India's eyewear market.

"As a company and as an entrepreneur, our job is to create value for the customer, and now, increasingly, for the shareholder as well. As far as valuation is concerned, it's what the market decides," Bansal told CNBC-TV18.

Lenskart gets a 'Sell' rating

Ahead of its market debut, Ambit Capital initiated coverage on Lenskart with a 'Sell' rating, citing limited upside at current valuations despite long-term growth visibility.

Ambit has set a target price of ₹337, implying a 16% downside from the upper end of the IPO price band at ₹402. This makes Ambit one of the first major brokerages to issue a bearish call on the stock even before listing.

Company snapshot

Founded in 2010, Lenskart is one of India's largest omnichannel eyewear retailers, integrating a strong digital platform with an expanding network of physical stores.

The company operates 2,137 stores in India and 669 overseas, offering features such as virtual try-ons and home eye tests to enhance customer engagement.

In FY25, Lenskart reported a net profit of ₹297 crore, marking a sharp turnaround from a ₹10 crore loss in FY24. Revenue rose 22% YoY to ₹6,625 crore, driven by strong domestic demand and growing international presence.