Lenskart Solutions Ltd.'s IPO continued to grab strong interest from investors on its second day of bidding, with strong demand from institutions and retail investors. At the press time, the issue was subscribed 1.19 times with bids for 11.85 crore shares against a total offer of 9.97 crore shares.
The retail investor segment saw the highest subscription with 1.46x, followed by QIBs at 1.42x and NIIs at 0.54x. The IPO, which opened on October 31, will close on November 4, with a price band of Rs. 382-Rs. 402 per share, aiming to raise Rs. 7,278 crore.
The GMP stood at Rs. 74 today, implying an estimated listing price of Rs. 487 per share, or 21% higher than the upper issue price of Rs. 402. The GMP has steadily climbed from Rs. 48 in early sessions to a high of Rs. 108.
Analysts credit the premium to robust brand presence, a history of steady growth, and high investor confidence from anchor investors' participation.
A day before the IPO launch, Lenskart raised Rs. 3,268 crore from anchor investors, with all bids received more than Rs. 68,000 crore, almost 10 times the size of the issue.
The Rs. 7,278 crore IPO consists of a new issue of Rs. 2,150 crore and an Offer for Sale (OFS) of 12.75 crore equity shares from promoters and investors, including Peyush Bansal.
The proceeds from the new issuance will be used for the expansion of company-operated stores, leasing and licensing payments, and to strengthen technology and cloud infrastructure.
Lenskart will also use a portion of the proceeds for marketing and promoting its brand as well as for strategic acquisitions to strengthen its market position.
Brokerages view Lenskart as a long-term positive investment despite its high valuation. SBI Securities and SMIFS both recommended the “Subscribe for Long Term” while praising the company’s business model, operational efficiency, and growth opportunities in the underpenetrated eyewear market in India.
According to analysts, Lenskart is headed in the right direction, with EBITDA margins improving from 7% in FY23 to 14.7% in FY25.
Choice Broking cautioned that the valuations of 10.1x EV/Sales and 68x EV/EBITDA are expensive and recommended that investors keep their eye on the company's potential for scalability and margin improvement.
Allotment is likely to be determined on November 6, with listing taking place on November 10 on BSE and NSE.
Analysts cited concerns related to valuation but believe that Lenskart’s fundamentals, coupled with investor sentiment and the company’s expansion approach, could lead to a positive debut and sustainable growth in the coming years.