Lenskart Q2 Review: Motilal Oswal Raises Target Price As Growth, Margins Improve

Lenskart's consolidated Q2 revenue grew 33% YoY (vs ~34% YoY in Q1, in line) to Rs 2,850 crore (+5% QoQ). The company's volume grew ~27% YoY to 10.6 million (vs ~25% YoY in Q1), while implied ASP rose ~4% YoY to Rs 2,681 (+4% QoQ). Lenskart added 165 net new stores (India: 143, International:22) during the quarter, bringing the total store count to 3,624 (up ~23% YoY). Gross profit rose 34% YoY to Rs 1,990 crore (+4% QoQ), as product margin expanded ~80 bp YoY to 70% (-25bp QoQ, 20bp beat). Employee expenses increased ~24% YoY, while other expenses (ex- leases) rose ~35% YoY.

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Motilal Oswal Report

Motilla Oswal has reiterated its Buy rating on Lenskart Ltd. with a revised target price of Rs 815,based on a 48 times Dec'28 blended pre-Ind AS EBITDA multiple. The target price implies a potential uspide of about 18% from the reports market price.

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According to the brokerage, Lenskart has built strong moats in a difficult-to-scale category through -

• a centralised, automated manufacturing facility and logistics network;
• strong backward integration, which provides significant cost advantage;
• large omnichannel presence;
• everaging technology to ease constraints on scaling up; and
• a house-of-brands architecture, to achieve its goal of making quality eyewear accessible and affordable.

The brokerage fine tunes its FY27-29 estimates and model 27%/45%/57% compound annual growth rate in revenue/pre-Ind AS EBITDA/adjusted PAT over FY26-29, driven by ~28%/25% revenue CAGR in India/International.

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The brokerage expects the pre-IND AS EBITDA margin to expand to ~19.3%/13.0% in India/International by FY29.

Lenskart Q2 Results Highlights

• Lenskart's consolidated Q2 revenue grew 33% YoY (vs ~34% YoY in Q1, in line) to Rs 2,850 crore (+5% QoQ).
• The company's volume grew ~27% YoY to 10.6 million (vs ~25% YoY in Q1), while implied ASP rose ~4% YoY to Rs 2,681 (+4% QoQ).
• Lenskart added 165 net new stores (India: 143, International:22) during the quarter, bringing the total store count to 3,624 (up ~23% YoY).
• Gross profit rose 34% YoY to Rs 1,990 crore (+4% QoQ), as product margin expanded ~80 bp YoY to 70% (-25bp QoQ, 20bp beat).
• Employee expenses increased ~24% YoY, while other expenses (ex- leases) rose ~35% YoY.
• Its reported pro forma EBITDA surged 46% YoY to Rs 620 crore (+6% QoQ, in line), with margin expanding ~200 bp YoY to 21.9% (up ~20bp QoQ, ~25bp miss).
• Lenskart's lease rentals grew 22% YoY (vs 33% YoY growth in revenue), thereby, driving operating leverage.
• Pre-IND AS EBITDA jumped 64% YoY to Rs 390 crore (+8% QoQ, in line), with margin expanding ~265 bp YoY to 13.7% (+45bp QoQ, in line).
• Depreciation/interest costs grew 26%/19% YoY each, while other income surged ~63% YoY (23% beat).
• Adjusted PAT surged 2.1x YoY to Rs 226 crore (+2% QoQ) and came in 6% ahead of brokerage's estimate, due to higher other income and a lower tax rate.

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