Lenskart is going public (IPO) next week, and the grey market premium (GMP) is crashing down. No doubt, the Lenskart IPO is one of the most anticipated; investors were extremely excited earlier. But why is that excitement seeming to cool down by 70% (a significant drop) right now? What caused this fall? Will it still be a good investment for you? For all that, learn more.
The Grey Market Premium (GMP) Crash
- After the announcement, Lenskart’s GMP was INR 108, which means that traders were anticipating the stock to be priced about INR 108 higher than its issue price of INR 402.
- It's about 27% profit on listing day.
- On the contrary, the GMP has fallen to ₹30, meaning the expected listing profit is only 8%.
- The excitement is down by almost 70% meaning the investors are being cautious.
Why The Fall?
Several analysts say that:
- High valuation – Because Lenskart’s stock price is already expensive, there’s less room for quick profits for the investors.
- Weakness in the overall stock market – Investors are being cautious in general.
However, the demand for the Lenskart IPO was huge.
GMP fell significantly, but the demand remained massive:
- Lenskart’s IPO size: INR 7,278 crore.
- Total bids received: INR 1 lakh crore plus (28.3 times oversubscribed), which is a substantial number.
Here’s How Different Investors Reacted
- Institutional investors (who bring in big funds): 45 times subscription.
- Non-institutional investors (meaning the High Net-Worth Individual/rich people): 18 times.
- Retail (like you) investors: 7.5 times.
- Overall, investors applied for 281 crore shares while only 9.97 crore shares were available. It's evident that people believe in the brand.
Analysts’ View
- According to them, Lenskart is a strong company, but short-term gains may be small.
- SBI Securities states that Lenskart is a solid company, but it is priced relatively high.
At the upper price band, Lenskart is valued at:
- 10.1 times its FY25 sales (EV/Sales).
- 68.7 times its FY25 EBITDA (EV/EBITDA).
Clearly, steep valuations mean short-term listing profits are limited. Given that, the company’s long-term growth looks promising. Reason: well-positioned in India’s fast-growing eyewear market. And strong business performance.
Lenskart Business Performance
Lenskart is improving its business numbers steadily:
- Its EBITDA margin (meaning profitability before interest and tax) grew from 7% in FY23 to 14.7% in FY25.
- Revenue is INR 6,653 crore (it grew at 32% CAGR over 2 years).
- Its EBITDA is INR 971 crore (it's a 3.7x jump).
- Its Net profit (PAT) stands at INR 297 crore in FY25 compared to the INR 4 crore loss 2 years ago.
Why Investors Still Like Lenskart?
- Strong brand presence – Huge retail network of over 2,700 stores worldwide, including 2,000 in the home country.
- Its omnichannel model – Meaning the brand is active online and offline. Its tech-based manufacturing is giving it a cost advantage as well.
- International expansion: Lenskart is establishing a strong presence in Singapore, the UAE, and the US markets.
Nirmal Bang (well-known Brokerages) called Lenskart’s business “resilient.” And says that it's a good business built for the long run.
StartupTalky- Business News, Insights and StoriesNitin Konde
Original Article
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