Lenskart's Bull vs Bear Case Comes Down To One Question: Is Its Growth Worth The Valuation?

Lenskart Solutions Ltd. has become one of the clearest examples of the current divide in India's consumer market investing: how much are investors willing to pay for growth? 

Lenskart's net profit for the fourth quarter of FY26 declined 8.5% year-on-year. However, revenue from operations surged 45.6% to Rs  2,516 crore from Rs 1,728 crore in the corresponding quarter of the last fiscal. Earnings before interest, taxes, depreciation and amortisation soared 83.8% to Rs 540 crore from Rs 294 crore in the year-ago period. On the operational front, Ebitda margin expanded to 21.4% from 17%. 

Bull Case

The company's scale-up strategy is beginning to translate into stronger profitability as operating leverage kicks in. FY26 EBITDA nearly doubled,and investors bullish on the company see this as an early sign that the business can drive profitability alongside growth rather than sacrificing one for the other.

Lenskart also added 604 net new stores in FY26 compared with 334 in the previous year, highlighting the pace at which it is expanding its retail footprint. Bulls argue that Tier-2 and smaller Indian cities remain significantly underpenetrated, leaving room for years of expansion. International operations are increasingly contributing to profitability. EBITDA margins in overseas markets improved sharply, while businesses in Japan and Saudi Arabia are reportedly performing ahead of expectations.

Supporters of the company point to its vertically integrated structure, including centralised manufacturing, backward integration and AI-led operations. The combination is seen as creating a strong competitive moat in a fragmented eyewear market.

Bear Case

Despite strong growth, the stock trades at around 104x estimated FY27 earnings and roughly 75x FY28 earnings, levels that many analysts view as difficult to justify even for a high-growth consumer brand.

Adding hundreds of stores every year creates operational complexity. Bears argue that aggressive expansion raises the risk of execution missteps, weaker store productivity or inefficiencies over time. The company's capital expenditure has nearly doubled alongside its expansion push. Critics worry that rapid scaling could strain cash flows and increase pressure on future returns.

A weaker rupee poses a risk, particularly if imported components or international operations become more expensive to manage. Even with strong revenue growth, projected return ratios remain relatively low. FY28 return on equity is estimated at around 11%, while return on capital employed is projected near 8%, suggesting profitability metrics may still lag the valuation premium investors are paying.

ALSO READ: Lenskart Q4 Results: Net Profit Slips Even As Revenue Jumps Over 45%, Margins Expand

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