From valuations to promoter holding pattern: Four critical things to know ahead of the Lenskart IPO

Lenskart is in the news as the company is set to launch its ₹7,278 crore initial public offering on October 31. The IPO is a combination of ₹2,150 crore fresh issue and ₹5,128 crore for a valuation of ₹70,000 crore. The price band is fixed at ₹382 to ₹402 per share, with a lot size of 37 per share. As investors assess the opportunity to invest in Lenskart IPO, here are the key things to consider before investing.

First year of profitability

Lenskart, which is India’s leading technology-focused eyewear company involved in the design, manufacturing, branding, and retail of eyeglasses, sunglasses and lenses. The company’s revenue has grown at a 32.5% CAGR from FY23 to FY25. However, the company turned profitable in FY25 for the first time after posting losses for FY23 and FY24 at ₹64 crore and ₹10 crore. In FY25, the company posted a profit of ₹297.3 crore. In addition, in Q1FY26, the company maintained profitability at ₹61 crore.

High other income component

As the company turned profitable in FY25, experts argue that the profitability is induced by a key other income component. The company reported other income of ₹356 crore in FY25 vs ₹182 crore in FY24. The sharp jump in other income was primarily due to a significant increase in fair value through profit and loss (FVTPL) gain on deferred consideration of ₹167 crore for the acquisition of owndays. In simple terms, it is a result of a change in the accounting value of future payments for the acquisition of Owndays.

Lenskart had acquired Owndays in mid-2022 , which is a Japanese eyewear company, in a structured deal, which included some upfront cash payment and the remaining on a later date, which was subject to the achievement of key performance goals. The revaluation of the future payment led to a gain of ₹167 crore, which was recorded as other income in FY25.

In addition, the company also recorded gains on the redemption of mutual funds worth ₹72.6 crore, up from ₹64 crore in FY25, which was partially offset by a decrease in interest income from fixed deposits.

Expensive valuation

Valuation remains a key parameter for evaluating any IPO investment. The Lenskart Solutions IPO is opening at an expensive valuation of 234x the price-to-earnings (P/E) ratio after considering its low track record of profitability. However, some experts also argue, the company is in a high-growth segment, which has ample room for growth due to low penetration, hence valuing it at P/E ratio alone is not justifiable. The company is also valued at 70x EV/EBITDA ( i.e. ₹70 for every ₹1 of EBITDA), which is also considered to be on the higher side. Such valuation also indicates the company expects the growth to remain high and steady in the coming future.

Low promoter holding

The company holds a low promoter group holding at 19.9% and the promoter group is one of the selling shareholders in the issue. The post-issue promoter group holding is expected to come down to 17.5%. In addition to the promoter group, other institutional investors are participating in the offer-for-sale, including Soft Bank, Temasek, Schroders Capital, Kedaara Capital, and Alpha Wave Ventures.

In summary, the Lenskart IPO is surrounded by concerns about expensive valuations, low promoter holding and sustained profitability. The high valuations can only be justified if company succeeds in maintaining its strong growth in the coming years.