In a mix of new issue and offer for sale (OFS), optical store Lenskart Solutions will make its long-awaited initial public offering (IPO) to raise a staggering amount of Rs 7,278 crore.
Lenskart which was founded in 2010 has been expanding its presence both domestically and globally by distributing spectacles through more than one channel and eventually reaching and serving over 10 million customers.
Having started with online sales of contact lenses, Lenskart Solutions has grown to add full eyewear and offline outlets.
After the initial public offering (IPO) is settled, their shares will be traded on the BSE and NSE from November 10 through a three-day subscription process running from October 31 to November 4.
The IPO which consists of a 13.22 crore share issue and a fresh issue of Rs 2,150 crore, is priced at a band of Rs 382-Rs 402 per share.
The investors need to offer a bid of no less than 37 shares. The minimum investment by a retail investor, if we work on the higher price, is Rs 14,874 in a lot size of 37 shares.
Meanwhile, seventy-five percent of the issue will be reserved for qualified institutional buyers (QIBs). A share will be allotted to retail investors at a rate of ten percent, with the remaining fifteen percent being assigned to non-institutional investors.
Eligible employees will also get a discount of Rs 19 per share.
Leading investors such as SoftBank’s SVF II Lightbulb, Kedaara Capital, and MacRitchie Investments of KKR will also be offloading part of their holding by selling through the OFS, along with promoters Peyush Bansal, Neha Bansal, Amit Chaudhary, and Sumeet Kapahi.
Founder and CEO Peyush Bansal, who holds a 10.3% share in the company, would obtain more than Rs 785 crore from the sale of his 2.05 crore shares at the upper price point.
In a case of high-profile backing, billionaire investor and DMart owner Radhakishan Damani not only made his commitment to the firm’s future by nearly Rupees 90 Crores pre-IPO funding round over the issuing of Lenskart shares, but also made his strong conviction evident by coming in with nearly Rupees 90 Crores.
The proceeds of the new issue will be used by Lenskart to increase its digital prowess and retail footprint.
New company-operated stores would be priced at opening cost of around Rs 273 crore, lease and rent rentals would be Rs 591 crore, technology and cloud infrastructure would be enhanced with Rs 213 crore, and brand promotion would be Rs 320 crore.
The rest will be utilized for general business requirements and future acquisitions.
What Is Unique About This IPO?
Market Leadership via Omni-channel Integration: Lenskart Solutions stands as the top player in the Indian eyewear retail market due to its hybrid omni-channel business model comprised of a large physical store network and a powerful online presence.
Vertical Integration and Control of Production: Lenskart Solutions dominates the retail game by having its hands on every step of the value chain from production, and creation, to retailing unlike most other retail players who control only part of it.
Robust Financials and Profitability: The firm has recently disclosed net profit of Rs 2,970 million on top of its revenues of Rs 66.25 billion for FY25, thus becoming profitability generating firm.
Prominent Investors: The company has attracted the likes of Temasek, ADIA, SoftBank and Kedaara Capital as its major shareholders which is a good sign of institutional faith.
Use of IPO Proceeds for Technology and Expansion: The total amount raised, approximately Rs 72.78 billion, will be allocated to various areas including cloud infrastructure, advertising, AI-enabled fulfillment, opening of new outlets, and perhaps even buying out a competitor. The investment will facilitate the ability of Lenskart to expand both in the Indian market and outside as well.
Important details:
Application of funds: The company’s operations expansion is the primary use of the funds raised during the initial public offering (IPO). One of the primary drivers of this funding allocation is the planned opening of new stores in India, which will cost Rs 2,720 million. Meanwhile, Rs 5,910 million will be spent on leasing, rentals, and other costs for the company’s current locations.
10% of the shares will go to retail investors, 15% to non-institutional investors (NIIs), and the remaining 75% will go to qualified institutional buyers (QIBs).
The minimum application lot size for retail investors would be 37 shares, and the application amount would be approximately Rs 14,874.
Risk Factors
Dependence on physical manufacturing facilities: Operations of the business can be adversely affected by any slack, malfunction, or shutdown at manufacturing facilities.
Market competition: Market share of Lenskart could be affected by competition from both offline and online businesses in the organized eyewear competitive market.
Expansion risks involve increased operating costs and implementation risks, which may place pressures on margins due to high growth and store expansion.
Dependence on key promoters: The business’s functioning largely relies on the top management and main originators; their departure could have a serious effect on the sustainability of the business.
Regulatory risks: Any changes in taxation, trade regulations, or governments’ policies might affect the operations and hence the company’s profits.
Technology and IT risks: Dependence on IT systems, hacking attempts, and breakdowns in the system could lead to the operation of the business being stopped.
Funding and valuation risks: The use of IPO proceeds and the market’s expectation of the valuation create risks based on investor sentiment and future funding.
Economic and geopolitical uncertainty: The retail demand may be influenced by the overall market fluctuations, currency changes, inflation, and geopolitical disputes.
Customer behavior risks: Changes in consumer buying behavior for brands, fashion, and prices of eyewear may have an effect on sales.
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Is It Time to Invest in Lenskart’s IPO?
Now a profit-making firm with consistent profit margins, Lenskart is well-placed for long-term capital appreciation and leadership in the eyewear market.
Overall, Lenskart is a safe bet investment in the healthcare and consumer lifestyle sector because of its vision, which is high-growth retail growth, technology-driven customer personalization, and sustainability.
Rather, before making an investment, some research on market dynamics, growth sustainability, and valuation is advised.
Investors should examine the company’s corporate governance, stock prices, and fundamentals as part of their due diligence process before making an investment.
