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 per share on the NSE, a 1.74% discount to its IPO price. On the BSE, the stock was listed at Rs 390 apiece, a discount of nearly 3%.
The stock declined as much as 12% in the first few minutes to hit a low of Rs 356 a piece. However, it made a recovery, hitting an intraday high of Rs 413.75, and settled with a gain of 0.27% at Rs 403 apiece.
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 discounted listing came even as the Rs 7,278 crore initial public offer (IPO) of Lenskart was booked 28.26 times, an impressive figure for a large-sized IPO. Its below-than-expected listing is likely to weigh on the debut of two other IPOs -- Groww and PhysicsWallah -- as brokerages see limited upside and investors shift focus to reasonably valued stocks.
The premiums of the two IPOs in the unofficial grey market also indicated limited listing gains. PhysicsWallah’s share was trading with 2.75% GMP over the IPO price on Monday while Groww had a GMP of 5%, according to data on Investorgain. Groww had a GMP of 16.7% on November 1.
Shivani Nyati, Head of Wealth at Swastika Investmart, stated that Groww’s issue has witnessed strong investor interest due to the platform’s high brand recall and the broader structural tailwinds in India’s financialisation story, though the valuation appears steep relative to traditional brokerages due to expectations of future high growth.
“Investors allotted shares may consider booking partial gains if the listing premium is significant, while medium-term investors can monitor post-listing execution, monetisation improvements, and profitability before committing to fresh positions,” she said.
The Rs 6,632 crore IPO of Billionbrains Garage Ventures, the parent company of stockbroking platform Groww, was subscribed 17.60 times and is due for listing this week. The Rs 3,480 crore IPO of PhysicsWallah is set to open for public subscription from Tuesday.
Two leading brokerages -- Angel One and SBI Securities -- have given a “Neutral” rating to the IPO loss-making PhysicsWallah. Angel One said that PhysicsWallah's financials cannot be compared on a P/E basis as it remains a loss-making company, with no listed like-to-like peers in the Indian ed-tech space.
"While the company continues to deliver strong revenue growth and enjoys high brand recall, profitability remains constrained by rising competition and elevated scaling costs. Hence, we assign a 'Neutral' rating, recommending investors to wait for clearer earnings visibility before taking a long-term position," it said.