Lenskart IPO Buzz Cools: Strong Subscription Meets Plummeting Grey Market & Analyst Sell Call!

Lenskart Solutions' much-anticipated Initial Public Offering (IPO) is nearing its stock market debut. The IPO witnessed strong investor participation, being subscribed over 28 times during its bidding period. The Qualified Institutional Buyer (QIB) category was particularly popular, seeing subscriptions 45 times over.

However, the initial excitement has tempered significantly. The Grey Market Premium (GMP), which indicated potential listing gains of around 24% earlier, has collapsed to approximately 2%. This sharp decline suggests a potential for a muted market debut, despite the overall strong subscription numbers.

Analysts have voiced concerns regarding Lenskart's steep valuation, with its Price-to-Earnings (P/E) ratio hovering around 230 times. Lenskart CEO Peyush Bansal acknowledged the valuation debate, emphasizing the company's focus on value creation and long-term market potential, alongside a reported 90% EBITDA Compound Annual Growth Rate (CAGR).

Adding to the caution, Ambit Capital initiated coverage on Lenskart with a 'Sell' rating and a target price of ₹337, implying an expected downside from the IPO price band. They cited limited upside potential at current valuations, even with long-term growth visibility. Lenskart, an omnichannel eyewear retailer founded in 2010, reported a net profit of ₹297 crore in FY25 on revenues of ₹6,625 crore, marking a turnaround from a FY24 loss.

**Impact** This news could lead to cautious investor sentiment towards high-valuation IPOs. The sharp drop in GMP and the 'Sell' rating from a prominent brokerage might signal potential volatility or a tepid listing for Lenskart, despite strong initial subscription. The market will closely watch how investors react to the valuation concerns versus the company's growth story. Rating: 6/10.

**Difficult Terms Explained** * **IPO (Initial Public Offering)**: The process where a private company first sells its shares to the public, becoming a publicly traded entity. * **Grey Market Premium (GMP)**: The unofficial price difference between the IPO's issue price and the price at which its shares are traded in the grey market before the official listing. A higher GMP often suggests strong demand and potential listing gains. * **Subscription**: Refers to the extent to which an IPO issue is oversubscribed. A subscription of 'X' times means investors applied for 'X' times the number of shares offered. * **QIB (Qualified Institutional Buyer)**: Large, sophisticated investors like mutual funds, foreign institutional investors, pension funds, and insurance companies. * **EBITDA CAGR (Earnings Before Interest, Taxes, Depreciation, and Amortization Compound Annual Growth Rate)**: A measure showing the average annual growth rate of a company's operating profit over a period, indicating its profitability expansion. * **P/E Ratio (Price-to-Earnings Ratio)**: A valuation metric calculated by dividing a company's stock price by its earnings per share. It indicates how much investors are willing to pay for each unit of earnings. * **Offer for Sale (OFS)**: A part of the IPO where existing shareholders sell their stake, and the money goes to the selling shareholders, not the company. * **Fresh Issue**: The part of the IPO where the company issues new shares to raise capital, which is then used by the company for its business operations.