The eyewear giant’s $821 million IPO sold out in hours, but analysts warn that India’s booming startup valuations may be stretching too far as investor enthusiasm outpaces profitability.
India’s startup ecosystem witnessed another record-breaking milestone as Lenskart Solutions Ltd. completed its $821 million initial public offering (IPO) — fully subscribed in less than five hours. But while the speed of the sale showcased strong investor appetite, it also reignited concerns over whether Indian startup valuations are becoming too inflated as companies rush to list on public markets.
At the top of its price band, Lenskart’s IPO values the company at roughly $8 billion, equivalent to around ten times its previous year’s enterprise value-to-sales ratio. Analysts and investors alike are divided on whether this figure reflects genuine growth potential or simply investor euphoria in India’s thriving consumer tech sector.
High Demand, Higher Questions
The IPO drew overwhelming participation across all investor categories — from retail buyers to institutional funds. Yet, the strong demand hasn’t silenced valuation critics.
DSP Asset Managers Pvt., one of the IPO’s anchor investors, found itself defending its position after facing backlash on social media. The firm maintained that Lenskart’s business is “strong and scalable,” but admitted the deal was “expensive.”
“Lenskart’s IPO offers scale but not necessarily value,” noted Gaurav Garg, analyst at Lemonn Markets Desk, who emphasized that the company’s pricing sits at a significant premium to global peers like EssilorLuxottica SA, which trades at nearly 45 times forward earnings.
Echoes from India’s IPO Past
The valuation debate surrounding Lenskart mirrors previous IPO controversies in India’s startup market, such as Zomato’s high-profile listing in 2021 and Paytm’s dramatic 27% plunge on debut. Both cases raised questions about the sustainability of startup valuations when profitability remains elusive.
Since 2021, 32 Indian startups have gone public, but 14 now trade below their issue prices, according to Bloomberg data. This has led to rising caution among mutual funds and retail investors, who fear they may be overpaying for high-growth stories that are still years away from consistent earnings.
Analysts Weigh In
Despite the cautionary tone, many experts remain optimistic about Lenskart’s long-term growth story. Analysts at SBICAP Securities Ltd. acknowledged the “stretched” valuation but still recommended subscribing to the IPO, citing the brand’s dominant market position and strong growth potential in India’s underpenetrated eyewear market.
Choice Equity Broking’s Rajnath Yadav echoed similar sentiments, calling the valuation “significantly high” but pointing to Lenskart’s expanding global footprint, with nearly 40% of its revenue now coming from overseas markets.
A Sign of the Times
Lenskart’s blockbuster IPO is both a testament to investor confidence and a warning signal for India’s startup sector. The company’s success highlights a booming appetite for tech-driven consumer businesses but also underscores the growing valuation pressure in an increasingly crowded IPO pipeline.
As India’s public markets continue to welcome more startups, analysts say it’s time for both founders and investors to strike a balance between growth and value — ensuring sustainable success beyond the initial hype.
Conclusion
Lenskart’s IPO proves that India’s startup ecosystem is more vibrant than ever, but it also raises vital questions about how far startup valuations can stretch before market corrections begin. Whether this marks a new phase of maturity or another cycle of overvaluation remains to be seen — but one thing’s certain: investors are watching closely.
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