Lenskart revenue could grow 6x in next decade, valuation looks optically high: Emkay

Lenskart’s top line could potentially grow sixfold over the next decade, but the stock is already pricing in that optimism, making valuations look optically rich despite a strong earnings mix, with local brokerage firm MK Global at Rs. Initiating coverage on the stock with a target price of 525 said the current potential indicates upside of around 16% from levels around 16%. The valuation is based on the discounted cash flow (DCF) method, which translates to an implied 56x Dec-27E EBITDA multiple.

Citing strong structural tailwinds, brokerages remain positive on the Indian eyewear industry, which is currently valued at around USD 9 billion. These include a sharp 700 bps GST reduction, increasing incidence of refractive errors and growing acceptance of glasses as a fashion accessory. These factors combined are expected to drive an industry CAGR of ~13%, according to Radseer.

Lenskart, India’s largest eyewear retailer with a 5% market share, is positioning itself as a global player with technology embedded across its operations. The company leverages automation and vertical integration on the back end, while on the front end it uses remote optometry and virtual try-on. Advanced tools such as geo-analytics and vision AI aid store location selection and merchandising decisions.

As scale builds, these advantages are translating into a strong value proposition, reflected in 15-16% same-store growth, next-day delivery in 58 cities and rapid network expansion, with 450 store addition expected in FY26E. Lenskart has also gained meaningful traction in international markets such as Singapore and Dubai.

The company’s store-level payback period of approximately one year, supported by high throughput and low capital requirements, compares favorably with peers in the discretionary retail space.

While valuations may appear optically high following Lenskart’s recent profitability turnaround, MK sees significant long-term headroom. The brokerage expects nearly 6x revenue growth in India over the next decade, implying ~20% CAGR. A strategic shift towards company-owned, company-operated (COCO) stores, with operating leverage on growth investments, is likely to yield an average annual margin expansion of ~150 bps. This could result in an EBITDA CAGR of ~30% over the same period.

Over the medium term (FY25–28E), Lenskart is expected to outperform peers with projected revenue and EBITDA CAGRs of ~25% and ~50%, respectively, compared to 12-26% for other leading retail players. Emkay believes the business offers multiple scalable growth options that will further enhance its medium-term prospects.

Lenskart’s vertically integrated supply chain enables it to maintain a healthy gross margin of around 64% in India, while at the same time reducing store-level capital expenditure per outlet to around Rs. Keeps it low at 5 million. This coupled with an efficient cost structure, broad product range, sharp pricing and fast delivery capabilities, drives superior revenue throughput and underpins the company’s strong unit economics.

In the eyewear retail space, Lenskart has a clear leadership position operating at more than three times the scale of its nearest competitor, Titan Eyewear. Most other players in the market focus on third-party premium brands, a segment that represents only 5% of total industry volume, limiting their ability to scale meaningfully.

Insights into several scalable growth options for Lenskart from global peer benchmarking points. These include the development of a managed care ecosystem through initiatives such as Vision Sure, expansion into adjacent categories such as audiology, potential monetization of comprehensive eye tests, and the rollout of AI-enabled smart eyewear solutions in India, all of which could provide additional growth levers in the medium to long term.

The company has already started pilot initiatives in some of these areas. Emkay believes that successful implementation can lead to meaningful earnings growth in the medium term. A strong balance sheet, around Rs. With 40 billion in net cash, continued growth provides ample support for investment.

In Tuesday’s trading session, shares of Lenskart Solutions rose 0.60% to Rs. It was trading flat with positive bias at 455.60. Share Rs. 459.80 to an intra-day high of Rs. 450.25 and is currently trading around Rs. It has a market capitalization of 78,476 crores.

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