Lenskart IPO valuation: Is 230 PE ratio justified? Here's what CEO Peyush Bansal says

Lenskart IPO

Eyerwear retailer Lenskart's Rs 7,278-crore initial public offering (IPO) is set to open for public subscription on October 31 and close on November 4. At a price band of Rs 382-402 per share, the company seeks a valuation of around Rs 70,000 crore.

This implies a profit to earnings (P/E) ratio of 230. Lenskart CEO Peyush Bansal was asked during an interview with CNBC-TV18 about the company's valuation. Even if the company triples its profits over the new few years, it will still have a P/E ratio of 70, which is still considered to be expensive, the news channel said, while asking how much value was left for the investors aiming to invest in the company now.

Bansal highlighted the company's 90 percent EBITDA CAGR and the long-term growth potential of the eyewear market.

"As a company and as an entrepreneur, our job is to create value for the customer. Yeah, right now, increasingly for the shareholder as well. And as far as valuation is concerned, it's what the market decides," he told CNBC-TV18.

While speaking to the business news channel, Bansal added that the valuation will be very close to comparable peers.

Lenskart’s Chief Financial Officer (CFO) Abhishek Gupta meanwhile said that the investors have decided the price. He added that as a tech company, when the operating leverage starts kicking in, the bottom line grows much faster than the revenue growth.

"As our revenues grow, we will continue to compound and continue to add much," he further told the news channel.

Notably, analysts at SBI Securities noted that the issue appears stretched on valuation, which could limit listing gains. However, they cited the company’s business model and the potential of the domestic eyewear market as key positives.

The research report said profitability metrics will be closely monitored, as the company scales up operations. Lenskart’s reported EBITDA margin improved from 7.0 percent in FY23 to 14.7 percent in FY25. The brokerage report advised subscribing to the IPO for the long term at the cut-off price.

The company is set to launch its IPO to raise Rs 7,278 crore through a fresh issue of shares worth Rs 2,150 crore, and an offer for sale of 12.75 crore shares. The IPO will remain open for public bidding between October 31 and November 2.

Investors can bid for a minimum of 37 shares, requiring an investment of Rs 14,874, and in multiples thereafter. The allotments are likely to be declared on November 5, and the shares are scheduled to be listed on stock exchanges on November 10.

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