There is much buzz around all the news and social media on lenskart IPO, where most of them are calling it highly over valuation of around 70,000 Crore post issue. I have a slight different lens on the same, I am neither in rejecting nor accepting the Valuation of this IPO, but making you aware of the facts of the Case.
Back Ground – In 2010, Mr. Peyush Bansal along with his Co-founder found the GAP of Quality eyewear access to everybody and Branch positioning was also a question, hence by using his background, with the Tech Enablement he has started lenskart with the “D2C – Tech” approach, later on free trials and Free checkup, helped him to gain confidence among the India Mindset, and Later on Obviously his witty reactions on “Business Reality Show” and his comparatively professional approach made him Popular.
Journey so Far Started with Online Only retail model with initially started with lenses and later added eyeglasses and sunglasses, it was First Eye – wear e-commerce brand leveraging with D2C model, post initial traction, they have introduced home checkup and free trials gaining customer confidence and started offline store which is actually a kind of experience center and finally gained an investors like IDG Ventures and TATA sons as an angle investors. Post this Lenskart never looked backed opened numerous stores at strategic locations and invested heavily in Technology with 3D try on, face Mapping, which finally converted into unicorn with funding from Soft Bank Vision Fund, Kedaara Capital, Temasek and this edge also helped them to expand to Southeast Asia, Middle East, and acquired global eyewear brands (Owndays of Japan in 2022). Currently Over 2500 Stores claimed to serve 50 Million plus customers
Key Numbers for Valuation:-
Sales and Profit History by looking at the numbers it clearly visible that the efficiency is increasing and that is translating into loss minimization, though the number of latest financial year looks Profitable but this coming mainly because of other income, the YOY growth also looks promising and kind clear market leader with the maximum share in this space.
If you consider the Sales as a benchmark of more than 10X of Sales, 70X of EBITDA and more than 235 of PE, and that’s the major reason why there is a buzz on the internet, before I give my Analysis other key numbers which may be reasonable to consider for Judgment needs to be studied.
If you considered growth is also in all the parameters bit it total stores or Active Customers, this shows that company has not yet achieved maturity and if they can achieve the same numbers in futures, so the proposition of the growth looks promising.
The Bigger OFS Picture as investors : Maximum of the so called Fin influencer are quoting that this IPO is a tool for making money to PE investors and Promoters and a loss to common public ( Retail investors ), they are showing this numbers and mainly confusing the retail investors, however this IPO has many plus points which is the reason for its probable success its at the end Tech Driven direct D2C business, with their own manufacturing set up, and regarding OFS this is how the market works, PE investors take a bigger risk in many start up and few of them like this outshines and make money for them, but there is one more significant catch retail which no one is talking about that retail participation is only limited majority participation will come from Qualified institutional buyers and Non- Institutional investors & HNI, who thoroughly investigate before investing into any IPO.
Final Take: – Long wealth creation is possible in this IPO.
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