GRO’s GMP
Eyewear retailer Lenskart Solutions is going to be listed in the stock market next week, and there is both excitement and caution among investors regarding this. After good demand in the IPO, the company’s gray market premium, i.e. the estimated gain before listing, has fallen by almost 70% to just Rs 30 from its high of Rs 108 a few days ago. That means, now only a small increase of 8% is expected from the issue price of Rs 402.
This sharp decline in GMP shows that traders in the informal market have become cautious. Experts say that this has happened due to both high valuation and general slow movement of the stock market.
valuation concerns
This big IPO of Rs 7,278 crore received bids of more than Rs 1 lakh crore. This entire issue was subscribed 28.3 times. Big institutional investors showed the most interest. QIB portion was filled 45 times. The share of non-institutional investors was 18 times. The share of general investors (retail) was also subscribed 7.5 times, while the ticket size was large and valuation was high. According to exchange data, 281 crore shares were bid against 9.97 crore shares. That means the demand in the market is still strong.
Chances of getting less listing gain
Analysts believe that the company is good, but the valuation has been kept quite high. According to SBI Securities, Lenskart’s valuation is at the upper price band and EV/Sales as of FY25 stands at 10.1 times and EV/EBITDA at 68.7 times. Which is quite high and hence the scope of getting big profits on listing is less.
The brokerage says that the price of Lenskart has been kept high, hence the listing profit will be less. But the company’s business model is strong and it can take advantage of the rapid growth of the domestic eyewear market. The company’s EBITDA margin has increased from 7% in FY23 to 14.7% in FY25 and the market will keep an eye on this improvement even after listing.
Lenskart’s big impact on India’s eyewear market
Lenskart has attracted a lot of investors due to its strong store network, online + offline model and technology based design and manufacturing. The company has more than 2,700 stores, of which 2,000 are in India and also operates in countries like Singapore, UAE and America. In FY25, the company’s sales increased by 32% CAGR in two years to Rs 6,653 crore and EBITDA increased by 3.7 times to Rs 971 crore. The company has now made a profit of Rs 297 crore, whereas two years ago there was a loss of Rs 64 crore.
In the ET report, Nirmal Bang says that Lenskart’s flexible business model and strong manufacturing gives it an advantage. He says that Lenskart uses innovation, technology and omnichannel strategy to compete strongly in the Indian eyewear market and operate at lower costs in a fragmented industry.