- Citi Research initiates Neutral rating on Lenskart with Rs 500 target price and 7.8% upside
- Lenskart drives eyewear shift in India via affordability, accessibility, and lifestyle positioning
- Key strengths include integrated manufacturing, tech-led supply chain, and direct-to-consumer model
Citi Research has initiated coverage on Lenskart Solutions with a Neutral rating and a target price of Rs 500, citing a strong business model and execution track record, but valuations that already price in much of the medium-term upside. At the time of the report, Lenskart shares were trading around Rs 464, implying an expected share price return of about 7.8%.
Citi notes that Lenskart is driving a structural shift in India's eyewear industry by improving accessibility, affordability and purchase frequency, effectively transforming eyewear from an occasional medical purchase into a lifestyle category. The brokerage highlights the company's integrated manufacturing, technology-led supply chain, and direct-to-consumer (D2C) model as key pillars of its competitive moat.
The firm points to a "troika" powering Lenskart's model: data-driven technology that improves site selection and omnichannel engagement; centralized, vertically integrated manufacturing that enables mass customisation with faster turnaround times; and a dense, capital-efficient retail network with minimal inventory and strong unit economics.
Growth Visibility And Margin Expansion
Citi models a 22% revenue CAGR over FY25-FY28, led by store expansion and rising throughput. Pre-Ind AS EBITDA margins are expected to expand sharply-from 5.7% in FY25 to 14% by FY28-driven by operating leverage across marketing, technology and corporate overheads, alongside store maturation.
On profitability, the brokerage estimates EBITDA CAGR of 65% over FY25-FY28 and PAT CAGR of 81% over the same period. Returns are also projected to improve meaningfully, with adjusted RoIC (pre-tax) rising from 0.5% in FY25 (0.9% ex-goodwill) to 17% by FY28 (24% ex-goodwill), underscoring improving capital efficiency as the business scales.
Valuations Acknowledged; Upside Capped
Despite liking the business, Citi believes current valuations largely reflect these fundamentals. Its Rs 500 target is based on 55x Dec'27 EV/EBITDA (pre-Ind AS) - a premium to broader consumer peers such as Nykaa, Eternal, Swiggy, Trent, Titan and DMart, which typically trade in a 35-50x range.
Citi argues that the premium is justified by Lenskart's superior growth profile, noting its 38% pre-Ind AS EBITDA CAGR over FY26-FY28, compared with 17-37% for broader consumer peers. However, with much of this optimism already baked in, the brokerage sees limited scope for near-term outperformance.
Citi flags risks including global supply chain dependence, execution challenges around acquisitions, potential deterioration in store-level economics, and rising competitive pressures in the eyewear and lifestyle retail space.
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