Lenskart Shares Surge Ahead of Crucial Quarterly Results
In a significant market movement, shares of eyewear retailer Lenskart witnessed a sharp 5% jump during Friday's trading session on November 28. This bullish sentiment was primarily fueled by a positive outlook from global brokerage firm Jefferies and mounting anticipation for the company's first earnings report since its highly publicized stock market debut.
Jefferies' Bullish Stance and Market Performance
The rally was triggered after Jefferies initiated coverage on the Lenskart stock, assigning a coveted 'buy' rating and setting a target price of ₹500. The brokerage firm expressed strong confidence in Lenskart's growth potential within the underpenetrated and rapidly expanding Indian eyewear market, where the company currently holds a 5% market share. Jefferies highlighted Lenskart's vertically integrated omni-channel model as a key competitive advantage, ensuring cost efficiency, rapid delivery, and a superior customer experience.
This optimistic call comes at a pivotal moment. Lenskart is scheduled to announce its second-quarter results on Saturday, November 29, a report that analysts are calling a potential make-or-break event. The company, led by founder Peyush Bansal, had debuted on the stock market at a near 3% discount to its IPO price of ₹402 on November 10. Despite the tepid start, the shares have since recovered and are now up by approximately 6% from the listing level, commanding a staggering market valuation of ₹74,000 crore. The company's initial public offering had been a success, being subscribed 28.26 times according to NSE data.
What Analysts Expect from the Q2 Report Card
All attention is now focused on the upcoming financial results. Jefferies has projected a robust revenue CAGR of 24% over FY25–28, driven primarily by volume growth. Furthermore, they anticipate adjusted EBITDA growth at a CAGR of over 50%, accompanied by a significant margin expansion of 600 basis points. This improvement is expected to be led by operating leverage and enhancements in the international business's gross margin. The brokerage also noted that Lenskart's balance sheet is net cash, with rising return ratios and free cash flow (FCF).
However, concerns linger around the company's steep valuations. For FY25, Lenskart reported a net profit of ₹297 crore on revenue of ₹6,652 crore. It is crucial to note that this figure included a one-time gain of ₹167.2 crore related to the Owndays acquisition. Excluding this, the normalized profit was ₹130.1 crore, resulting in a modest net margin of 1.96%.
Santosh Meena, Head of Research at Swastika Investmart, opined that to justify its premium valuation of approximately 285x P/E, investors should look for sustainable profitability with EBITDA margins around 14–15% and revenue growth of 20–25%.
Echoing the growth expectations, Nitin Jain, Sr. Research Analyst at Bonanza, forecasted continued revenue growth in the 20-25% range, building on Q1 FY26's top line of ₹1,894 crore and a profit of ₹61-62 crore. He also anticipates a rise in transacting customers, which stood at 4.43 million in Q1 FY26, up from 3.41 million the previous year. The management's commentary on customer acquisition costs, repeat orders, international profitability, and festive-season momentum will be critical in shaping market sentiment.
Trading Strategy: A Cautionary Tale for Investors
Given the high expectations baked into the stock price, analysts are advising caution. Meena warned that Lenskart stock is "priced for perfection," meaning even a minor disappointment in margins or international growth could trigger a sharp correction. He suggests that only aggressive investors with a high-risk appetite should consider a small tracking position at current levels. Conservative investors are better advised to wait until after the results are declared to confirm that the financial turnaround is structural and not merely dressed up for the IPO.
The long-term story for Lenskart, supported by its plans to use IPO funds for store expansion and omnichannel strategy enhancement, remains compelling. However, the immediate future hinges on the company's first post-listing report card this weekend.
