Lenskart shares are 'fairly valued'; Morgan Stanley projects limited upside

Shares of newly listed Lenskart Solutions Ltd. will be in focus on Monday, December 15, after brokerage firm Morgan Stanley initiated coverage on the stock.

The brokerage has assigned an 'Equalweight' rating on the stock, with a price target of ₹445 per share, implying an upside of nearly 10% from Friday's closing price.

However, the target remains below the stock's post listing high of ₹448.80.

Morgan Stanley described Lenskart as a differentiated play on changing lifestyle trends, adding that the company is relatively insulated from broader macro headwinds.

The foreign brokerage said Lenskart has the potential to emerge as an EssilorLuxottica like global eyewear leader from India, backed by its market leadership and fully integrated business model.

That said, it believes the stock is fairly valued at current levels.

Earlier, Jefferies had also initiated coverage on Lenskart with a 'Buy' rating and a price target of ₹500 per share.

In its first quarterly results after listing, Lenskart reported a 21% year on year rise in revenue, while EBITDA grew 45%. The India business recorded 13% growth, while international operations expanded 33% from a year ago.

The company expects both revenue and EBITDA to improve in the third quarter and is targeting more than 450 net store additions across India.

Lenskart saw its one-month shareholder lock-in period come to an end on December 8.

As many as 40.7 million shares or 2% of the company's outstanding were up for trade. It must be noted that the end of the shareholder lock-in period does not mean all the shares will be sold in the open market, but they only become eligible to be traded.

Shares of Lenskart Solutions ended Friday's session marginally higher at ₹406, up 0.012%. The stock is trading slightly above its IPO price of ₹402 per share.