16% cut from IPO price? Lenskart gets a ‘Sell’ from Ambit just before listing

Eyewear retailer Lenskart, one of the most anticipated IPOs of 2025, has received a “Sell” rating from Ambit Capital just ahead of its market debut. The brokerage, which initiated coverage on the stock, said that while the company’s long-term growth potential is intact, its current valuations leave little room for upside.

Ambit’s target price of Rs 337 implies a 16% downside from the IPO price of Rs 402 per share, making it the first major brokerage to issue a bearish call on the stock before listing.

The caution comes even as Lenskart’s IPO received a strong response, with total bids of over Rs 1 lakh crore and 28 times subscription across investor categories. Institutional investors subscribed 45 times, showing strong interest despite what analysts widely called “lofty valuations.”

The Rs 7,278 crore IPO included an offer for sale by promoters and early backers, and was priced in the band of Rs 382–402 per share.

Adding to the sentiment pressure, grey market premium (GMP) for Lenskart shares has dropped sharply, crashing over 80% from a peak of Rs 108 to around Rs 15, indicating an estimated listing premium of just 3-4%.

Ambit’s rationale: Growth, but at what cost?Ambit expects Lenskart to deliver about 20% revenue CAGR between FY25–28, led by continued India expansion and growth in global markets. It forecasts an EBITDA margin expansion of 630 basis points (pre-IND AS 116) driven by better gross margins and operating leverage.However, the brokerage warned that scaling up a made-to-order business like eyewear requires significant manufacturing and logistics investments. With current capacity utilisation at 65% compared to the industry average of 80%, and planned capex of Rs 2,000 crore over the next three years, Ambit said free cash flow (FCF) is unlikely to turn positive before FY28.It noted that while Lenskart’s growth profile supports a premium versus other retail peers, the valuation gap has stretched too far. The firm’s India business trades at an implied 55x FY28 EV/EBITDA, around 15–30% higher than consumer peers such as Trent and Nykaa, despite a return on capital employed (RoCE) of just 9% compared to peers’ 35–40%.

“Lenskart’s current market-implied valuation factors in an aggressive 18% compounded revenue growth over two decades and assumes it can reach nearly 60% of EssilorLuxottica’s global market share in retail — a scenario that seems optimistic,” it said.

Analysts divided on long-term potential

While Ambit’s call adds a note of caution, most brokerages that covered the IPO, including SBI Securities, Nirmal Bang, and SMIFS, had recommended subscribing for the long term, citing Lenskart’s dominant brand, omnichannel presence, and improving profitability trajectory.

SBI Securities had said that listing gains may be muted due to expensive valuations but that Lenskart is well positioned in India’s underpenetrated eyewear market, supported by double-digit revenue growth and rising store-level profitability.

Lenskart’s revenue from operations surged 32.5% CAGR from Rs 3,788 crore in FY23 to Rs 6,653 crore in FY25, while EBITDA rose nearly fourfold to Rs 971 crore. The company also turned profitable with net profit of Rs 297 crore in FY25, reversing losses of Rs 64 crore two years earlier.

Listing outlook

With its Rs 7,278 crore IPO listing on November 11, all eyes are now on whether India’s eyewear leader can defy cautious analyst calls and deliver debut gains.

Also read: Lenskart IPO GMP crashes 70% from peak. Will it defy odds to reward investors with listing gains?

Given the sharply corrected GMP, Ambit’s sell rating, and concerns over stretched valuations, investors may witness a volatile debut.

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