NEW DELHI: Eyewear major Lenskart Solutions shares made a weak stock market debut on Monday, despite its IPO receiving a thunderous response in the primary market. Shares of Lenskart were listed at Rs 395 percent share on the NSE, a 1.74 percent discount to its IPO price.
On the BSE, the stock was listed at Rs 390 apiece, a discount of nearly 3 percent. The company's market capitalisation post listing of shares stood at Rs 67,660 crore. The stock declined as much as 11% in the first few minutes to hit a low of Rs 356. However, it made a recovery from the lows and hit a high of Rs 404 as of 10.30 am.
Ahead of its listing, the grey market premium (GMP) of Lenskart fell sharply on Friday. The unlisted shares of the company were trading with just 2.5% GMP over the IPO price, according to data on Investorgain. This is a steep decline from the 24% GMP the IPO was commanding on October 31.
Meanwhile, domestic brokerage Ambit Capital initiated coverage on Lenskart with a 'sell' rating. It warned that the company’s valuation appears stretched and offers limited potential for short-term gains. Ambit has set a target price of around Rs 337 per share, about 16% below the issue price of Rs 402, implying that the stock could see pressure upon debut if sentiment weakens.
The initial Rs 7,278 crore public offer (IPO) of Lenskart was booked 28.26 times, highlighting confidence investors have in the Indian primary market and in the company despite valuation concerns. The Rs 7,278-crore IPO received bids for over 281 crore shares as against 9.97 crore shares on offer, as per BSE data.
The portion for Retail Individual Investors (RIIs) part for Lenskart’s IPO fetched 7.54 times subscription, while the non-institutional investor category got subscribed 18.23 times. The quota set aside for Qualified Institutional Buyers (QIBs) received 40.35 times the subscription.
Lenskart’s valuation concerns stem from its high P/E. The Gurugram-based company turned profitable in FY25, posting a net profit of Rs 297 crore and its Rs 70,000 crore valuation at the upper end of the IPO price band translates to a steep 237 times price-to-earnings multiple.
This, according to many, makes the IPO a highly ‘expensive’ affair. Harshal Dasani, Business Head, INVasset PMS said that Lenskart’s forward valuation implies over 200 times current earnings, making it one of the most expensive listings in India’s digital retail space.
Shivani Nyati, Head of Wealth at Swastika Investmart said that while concerns around high valuation, recent losses, and competitive intensity weighed on short-term sentiment, the IPO received solid institutional interest backed by expectations of strong growth in international markets and improving margins.
“Investors allotted shares may consider holding for the medium to long term, supported by earnings visibility and expanding store footprint, with a stop loss around Rs 350 and Short-term traders may exit the position and look for better opportunities elsewhere,” added Nyati.