Social media buzz over Lenskart IPO valuation
New Delhi: The social media backlash against Lenskart Technologies’ nearly Rs 7,300 crore IPO is refusing to die, even though the offer got subscribed fully on the first day of opening.
The popular eyewear company is projecting itself as a tech-driven modern avatar of the old mom-and-pop ‘chasma dukan’ with its founder even talking about using high-end AI solutions for its products.
It’s eyeing a valuation of Rs 70,000 crore.
There are quite a few issues relating to the company that people have raised on X (formerly Twitter), LinkedIn and other social media platforms. And most of the backlash are about the pricing of the IPO.
The company is selling its shares at a per-share price of Rs 382-402. At Rs 402, investors who would buy the shares will have to pay a price-to-earnings (PE) ratio of 230. In other words for every rupee of net profit that Lenskart earns, the investor would be paying Rs 230.
Gostocks, a Chennai-based wealth management company, asked its clients to avoid applying in Lenskart, saying that the company has manipulated its profit.
The company claimed to have earned a net profit of Rs 297 crore in fiscal year 2024-25. But if one removes other income, the profit falls to Rs 30 crore.
The company has a “Total: Rs 356 crore of manufactured income!”, GoStocks said on X.
The company also gave reasons for its advice to avoid this IPO: “Inflated profits: Core business only made Rs 30 crore, not Rs 297 crore. Overvalued: FY25 PE of 230X on Rs 70,000 crore. FY24 reality check: Net loss of Rs 10 crore. VC exit strategy: Insiders cashing out at retail investors’ expense.”
Nalini Unagar, another X user, pointed out that in recent years, a host of companies eyeing to list through an IPO, is suddenly showing net profit although these companies were in net loss in the previous years. Along with Lenskart, Unagar also mentioned companies Mama Earth suddenly turned into net profit months before launching its IPO.
Kirtan A Shah, a CFP who posted on LinkedIn about the Lenskart IPO, explained why several of the mutual funds also invested in the Lenskart offer at such lofty valuations. According to Shah, it’s to continue to have good relations with the merchant bankers.
If these funds don’t invest in Lenslkart, and the same investment bankers come with another good issue, these funds may not get shares in that good issue since allocation in the IPO, partially, is at the discretion of the merchant bankers, Shah said, who claimed to have seen this from close quarters.
Rudra Chowdhury, another X user, said he was shocked to see two pension fund managers under NPS, HDFC and SBI, had invested Rs 25 crore each in Lenskart ‘at insane valutions’.
Market players say now that the issue has been fully subscribed, it will be interesting to see how the stock price performs say a month or two after listing.
The IPO is scheduled to close on November 4.
