Lenskart recovers from tepid open to close first day slightly above IPO price

Lenskart's shares experienced a rocky start on their first day of trading but ultimately closed slightly above the initial public offering (IPO) price. The Indian eyewear retailer launched its IPO, raising ₹72.8 billion (approximately $821 million), which was fully subscribed within hours, sparking discussions about the company's valuation. The stock opened at ₹395, lower than the IPO price of ₹402, and dipped as much as 11% to ₹356.10 during the day. However, it rebounded to finish at ₹404.55, giving Lenskart a market valuation of around ₹702 billion (about $8 billion). The IPO attracted significant interest, with bids coming in at 28 times the number of shares available, predominantly from institutional investors. Lenskart has pitched its vertically integrated business model, which encompasses everything from manufacturing to retail, as a means to surpass traditional optical chains and online competitors. Yet, the 15-year-old company faces challenges from rivals like Titan Eye+ and emerging direct-to-consumer brands, raising concerns about its ability to scale effectively and profitably both in India and internationally. In its most recent fiscal year ending March 2025, Lenskart reported a year-on-year revenue increase of 23%, totaling ₹66.53 billion (around $750 million). Its net profit stood at ₹2.97 billion (approximately $33 million), bolstered by a one-time accounting gain of ₹1.67 billion (about $19 million) related to its acquisition of Owndays. Excluding this gain, the company’s core profit was around ₹1.30 billion, or roughly $15 million. The firm aimed for a valuation of ₹700 billion (about $7.9 billion) at the upper end of its IPO price range, placing it among India’s most highly valued new-age consumer brands, similar to Honasa and BlueStone. This valuation marked a significant increase from the $5 billion level at which Lenskart shares traded in a secondary sale last June, with Fidelity later raising Lenskart's valuation to $5.6 billion. The IPO’s proposed valuation suggested approximately 230 times Lenskart's core net profit and about 10 times its revenue, igniting debates among retail investors and on social media. DSP Asset Managers, an early investor, defended the valuation despite acknowledging its high cost, emphasizing the company's strength and scalability. Lenskart's CEO, Peyush Bansal, known for his role as a judge on Shark Tank India, described the IPO as “fairly priced,” pointing to positive feedback from institutional investors. He stated, “We didn’t build Lenskart to reach a valuation. We did it to reach people, from Delhi to the smallest towns of India.” The proceeds from the IPO will be directed towards expansion efforts, including new store openings, enhancing supply chain and retail infrastructure, as well as investing in technology and marketing. A portion of the funds may also be allocated for acquisitions and other corporate needs. Existing investors such as SoftBank and Schroders Capital, along with co-founders Peyush and Nehal Bansal, Amit Chaudhary, and Sumeet Kapahi, sold shares during the IPO. Lenskart’s listing occurs at a time when numerous Indian startups are eyeing public markets, driven by tightening late-stage venture funding and growing domestic investor interest. Other companies, including fintech platforms Groww and Pine Labs, edtech startup PhysicsWallah, SaaS provider Capillary Technologies, and consumer brand BoAt, are also preparing for their IPOs in India.