Lenskart shares jump 5% after Jefferies initiates coverage with buy rating; target price at Rs 500 a share

lenskart

Jefferies India has initiated coverage on eyewear platform Lenskart Solutions Ltd with a buy rating with a target price of Rs 500 a share, implying a 23 percent upside from previous closing price. The newly-listed shares of the company jumped around 5 percent to trade at Rs 428.90 apiece on November 28.

In a bullish scenario, the brokerage sees the stock climbing to Rs 560, implying a 38 percent rise.

The brokerage notes that Lenskart, India’s largest tech-led eyewear retailer, commands just a 5 percent share of the country’s roughly $9 billion eyewear market, leaving a vast runway for expansion. Jefferies highlights that the company’s vertically integrated, omni-channel model delivers cost efficiency, faster fulfilment, and a superior customer experience—key advantages in a largely unorganised industry.

Jefferies expects India to remain the “bedrock” of Lenskart’s performance, contributing more than 85 percent of EBITDA, while its overseas business provides long-term optionality. Strong unit economics and rapid store paybacks are likely to propel Lenskart’s adjusted EBITDA at over 50 percent CAGR between FY25 and FY28, supported by premium pricing power, operational leverage, and margin gains. The brokerage argues that Lenskart’s valuation should be viewed in the context of its market leadership and the scale of opportunity, though it warns of risks from intensifying competition, tech-driven disruption through smart devices, and slower-than-expected demand.

India’s eyewear sector, growing at about 13 percent annually, remains significantly underpenetrated. Prescription eyeglasses—more than 70 percent of the market—are expanding due to rising refractive issues, prolonged screen exposure, pollution, and ageing demographics. Organised retail penetration stands at roughly 24 percent, with Lenskart now a clear leader through its 2,100-plus-store network. Even so, its current 5 percent market share underlines substantial room for growth.

A key differentiator, Jefferies notes, is Lenskart’s control over its entire value chain. With manufacturing hubs in India, Singapore, and Dubai, the company enjoys scale benefits and cost efficiency. Its experience-centre store format reduces capex and accelerates payback, with nearly 80 percent of stores recovering costs within a year—supporting a rapid company-owned, company-operated expansion model. This stands in contrast to the fragmented unorganised market, where prescription eyewear remains complex due to bespoke customisation, multiple product combinations, and multi-step manufacturing.

Jefferies expects Lenskart’s revenues to grow at about 24 percent annually over FY25–28, driven by higher transaction frequency and volume growth. Adjusted EBITDA is projected to expand at more than 50 percent CAGR, with margins increasing by 600 basis points, while earnings per share are seen rising at around 44 percent CAGR. The company maintains a net cash balance sheet, with improving return ratios and free cash flows.

In a downside scenario, Jefferies pegs the stock at Rs 320, a 21 percent decline from current levels, assuming a slower 16 percent revenue CAGR through FY28 and pre-Ind AS EBITDA margins rising to about 12 percent. The brokerage applies a 42x multiple on March 2028 pre-Ind AS EBITDA to derive the lower target.