Lenskart IPO: Drive Safe As The Road Seems Blurry Ahead!

The Lenskart IPO was billed as a triumph of India’s “new economy” – a ₹7,278 crore issue valuing the omni-channel eyewear startup at roughly ₹70,000 crore (about $10 billion). Twenty “anchor” investors (mutual funds, insurers, sovereign wealth funds) collectively bought ₹3,268.3 crore worth of shares at the top end of the band (₹402/share). Headlines blared that the anchor round was “oversubscribed 28 times”, with bids totalling an astonishing ₹68,000 crore – nearly ten times Lenskart’s IPO size of ₹7,300 crore. Retail investors, seeing big names like SBI Mutual Fund, HDFC Life, BlackRock and Fidelity on the anchor list, were lulled into confidence.

But on close inspection this grand spectacle is revealed as smoke and mirrors. The actual numbers tell a jarringly different story about Lenskart’s fundamentals and this IPO’s true economic impact. Despite headlines of profitability, Lenskart’s profit was largely a one‐time accounting gain, not sustainable margin. Even with that boost, its earnings power is minuscule relative to its price. And most critically, many institutional investors on the anchor list deployed only token amounts – often under 0.1% of their giant portfolios – apparently to secure future favors, not out of genuine conviction. This surreptitious collusion between merchant bankers and big funds creates a false aura of confidence, ensnaring ordinary investors in a rigged game.

Let’s see the hard data and the ugly truth behind the Lenskart IPO and the wider pattern of overpriced offerings in India’s IPO bonanza. Why the Lenskart IPO is disturbing and bad for investors – and to question whether regulators should intervene to stop this carnival of “dumb money” from endangering markets?

Lenskart’s Blinding Valuation: Numbers vs. Reality

Eyewear may be crisp and clear, but Lenskart’s financial picture is murky. According to its filings and media reports, the Gurugram-based eyewear retailer posted revenues of about ₹6,652 crore in FY2025, up only ~17% from ₹5,428 crore in FY2024. Notably, growth slowed sharply from 43% (FY23–24) to ~17% (FY24–25) – a worrying deceleration for a company pitching itself as high-velocity new economy. More importantly, profitability remains elusive. Lenskart reported a net profit of ₹297 crore in FY2025, reversing a small loss of ₹10 crore the year before. At first glance this seems like a miraculous turnaround.

However, digging deeper reveals the profit was largely illusory. An analysis notes that about ₹167 crore of that profit came from a one-time accounting gain (a “FVTPL gain”) related to revaluing deferred payments from Lenskart’s 2022 acquisition of the Japanese chain Owndays. In plain English, Lenskart booked a non-cash book profit when the expected payment on the Owndays deal was adjusted down. This “accounting gimmick” inflated FY25 earnings far above the business’s actual cash profit. After stripping out this one-off, analysts say the real FY2025 net profit was closer to ₹130 crore.

Even taking the headline ₹297 crore profit at face value, the margins are razor-thin. That profit on ₹6,652 crore revenue is only about a 4.5% net margin. On an adjusted basis (₹130 crore profit on ₹6,652 crore revenue), the margin plunges to under 2%. For a business like retail eyewear – an essential, high-volume consumer market – margins should be sturdier. As one analyst wryly noted, investors are being asked to pay “premium tech valuations for a retail business with single-digit margins.” In concrete terms, Lenskart’s IPO priced the shares at a P/E multiple of roughly 235x on FY25 earnings, or about 535x on the adjusted ₹130 crore profit.

To put this in perspective, global eyewear giants trade at far lower multiples. EssilorLuxottica (owner of Ray-Ban) did ~$30 billion revenue and ~$4 billion profit in 2024, trading at roughly 4× sales and 32× earnings. Warby Parker – Lenskart’s closest D2C rival – posted ~$771 million revenue in 2024 with minimal profit, valuing the company at just 3.6× sales. Even Titan Company (whose “Eye+” brand is tiny) trades at about 5× sales and ~80× P/E including jewelry division. In contrast, the Lenskart IPO implied ~13× revenue (₹85,000 crore market cap vs ₹6,415 crore est. 2025 rev) and hundreds of times P/E. As one observer put it, the IPO is based on hope and hype, not hard fundamentals.

Key Financial Metrics (FY24–FY25):

• Revenue: ₹5,428 cr (FY24) → ~₹6,415 cr (FY25 est.) (growth 17%).
• Net Profit: ₹–10 cr (FY24) → ₹297 cr (FY25 reported).
• Adjusted FY25 Profit: ~₹130 cr (after removing ₹167 cr one-time gain).
• Gross Margin: ~70% (eyewear is high-margin), but net margin <2% after costs.
• Total IPO Valuation: ~₹70,000 cr ($10B) at ₹402/share.
• Implied P/E at ₹297cr: ~236×; at ₹130cr: ~535×.
• Comparable P/E (EssilorLuxottica): ~32×; (Titan’s single-digit rev comp: ~88× including other divisions).
• Anchor Round Demand: Bids ~₹68,000 cr vs IPO size ₹7,300 cr (28× oversubscribed).
• Anchor Allotment: ₹3,268 cr allocated to 147 anchors (~45% of IPO).

In short, Lenskart was on track to tiny profits before IPO. Its true earnings power is minimal, yet with IPO funds that dilute shareholders and give promoters an exit, it is being marketed as a trillion-rupee baby. Unsurprisingly, many value investors balked – sales grew 22–25% (to ₹6,625–6,652 cr) but still pale next to the lofty ₹70K cr price tag. The promoters themselves seem wary: existing shareholders (including founders and big VC funds) are offloading ₹5,128 cr via the IPO, while fresh cash raise is only ₹2,150 cr. Why take money off the table if you believed the company’s best days lie ahead? It looks like a monetize-if-you-can strategy for insiders.

The Anchor Investor Racket: Puppet Masters of the IPO

The Lenskart IPO’s anchor round was orchestrated like a theatrical performance. Merchant bankers at SBI Capital, Motilal Oswal and others hand-picked a cast of marquee names – marquee by brand, not by commitment. Among Lenskart’s 147 “anchor investors” were national institutions and blue-chip mutual funds: SBI Mutual Fund, HDFC Mutual Fund, ICICI Prudential, Axis MF, Kotak MF, DSP MF, Tata AIA Life, HDFC Life, BlackRock, Fidelity, CPPIB, Goldman Sachs, and others. On paper, the list reads like a who’s who of smart capital. Retail investors were supposed to feel safe – after all, “SBI Life is backing it, it must be solid, right?”

Yet hidden in the fine print is an ugly truth. Multiple industry insiders and analysts have pointed out that these institutional anchors put in almost token sums. It is reported that HDFC MF bid about ₹50 crore and ICICI Prudential MF about ₹25 crore in the anchor round. To their massive AUM (assets under management of hundreds of thousands of crores), these are peppercorn allocations – under 0.1% of each fund’s total portfolio. Think about it: if you manage ₹1 lakh crore, placing ₹50 crore in Lenskart makes no measurable difference to your returns even if the stock 10×. It’s not an “investment thesis”; it’s a marketing expense.

This “put a bit of cash down” play has become an open secret on Dalal Street. The theory is that Merchant Bankers (MBs) leverage demand for good IPOs to force these big funds to grudgingly subscribe to weaker ones. As one fund manager unwittingly confirmed in public: Lenskart’s heavy anchor interest was indeed built on lots of small bets. DSP Mutual Fund even felt compelled to explain itself: it stated that “exposure to such IPOs is minimal and strategically planned”, emphasizing that Lenskart anchor allocations were just a tiny fraction of its assets. In effect, funds are saying “Yes, we’re in, but only as window dressing.”

And who truly benefits from this arrangement? Certainly not the retail investor who trusted the anchor list. The anchor array is used to create hype. Veteran investor Shankar Sharma summarized the ploy bluntly: the presence of famous anchor names is a tactic to build irrational confidence and “justify valuations that cannot be justified at any metric.”. It’s classic anchoring bias: by anchoring public perception to a blockbuster valuation (₹70K cr) supported by “smart” money, ordinary investors feel safe buying in – even though those same funds have placed only nickels on the table. As Sharma put it, this is “a beautiful little game” of psychology on retail investors.

How the Scheme Works (satirically): Merchant bankers act like savvy slot machine dealers. When they have a good IPO (say, companies at sensible prices), everyone wants a piece. So they hold that carrot over the noses of mutual funds and insurers, which are “sitting on huge piles of cash” desperate to get in on hot issues. The MBs say: “Oh, you want to play in our next big winner?

Fine – you can play, but only if you come along and pretend to subscribe to this dud IPO too.” (The threatened stick: “If not, forget about any allocation in our upcoming deals.”) The mutual funds grumble but often comply, plowing a token ₹25–50 crore into the anchor round of the lackluster issue. Just enough to put their name on the list.

The rest of the anchor demand comes as thin air. In Lenskart’s case, ₹68,000 crore was bid, but only ₹3,268 crore was allotted at ₹402. In other words, twelve times more interest was shown than stock available. It’s like an auction where bidders outnumber goods by 10X. Yet 147 investors got just 8.13 crore shares total – an average of about ₹22 crore per anchor. With names like SBI Mutual Fund and HDFC MF in the roster, posters in the crowd cheered wildly, not realizing each mega-fund quietly brushed off Lenskart like a speck of dust.

This contrived halo feeds directly into retail sentiment. When Lenskart’s grey market premium (GMP) was tracked, it peaked early on but fell to just ₹42 by November 5, 2025 – implying a mere ~10% first-day listing pop. Analysts noted that despite 28× overall subscription, traders in the unlisted market sensed limited upside, thanks to “valuation concerns”. One broker remarked that “heavy oversubscription often reflects short-term market excitement rather than deep conviction in the company’s fundamentals”. In plain terms: the stampede was real, but the stampede was in response to hype, not value.

The Taxing Toll of High Valuations

Lenskart’s P/E ratio provides a quantitative red flag. At the IPO price, trailing profits give a P/E over 230× (or 535× on adjusted profits). Even accounting-for-growth, such multiples are astronomical. For context, consider that Lenskart’s own insiders weren’t willing to pay anything like this. Founder Peyush Bansal was buying back shares from investors at around a $1 billion valuation just months before (roughly ₹7,000 crore, an eighth of the IPO valuation). Hardly confidence-inspiring. Some early investors reportedly offloaded at ~$5–6 billion marks, far below the IPO’s $10B ambition. The message was clear: smart money privately valued Lenskart far below its IPO price.

This echoes a common pattern. Veteran analysts point out that new-age IPOs often “start at unjustifiably high valuations” and then crash, “50%, 60%, 80% as we have seen” in companies like CarTrade, Nykaa, Zomato and Paytm. Note the phrasing: “as we have seen” – indicating these are recent history. Indeed, many of India’s recently listed tech‐heavy startups have collapsed post‐IPO after initial euphoria. The institutional anchor dance helps seed the euphoria; afterward, fundamentals take over – and they rarely justify the early price.

Business as (Almost) Usual: Revenue Trajectory and Rising Costs

Despite the hype, Lenskart remains essentially a loss-making startup still chasing sustainable profits. As inventor Patwardhan observes, “growth has softened” – revenue up only ~17% to ₹6,415 cr in FY2025. Marketing spend is still very high (₹352 cr in FY24, +20% year-on-year) as Lenskart expands brick-and-mortar stores and advertising. All this spending compresses margins. Even ignoring net profit, reported operational metrics don’t tell an unqualified success story: Lenskart’s own RHP apparently boasted profitability, but regulatory filings show its net losses continued into FY2025, and any profit is due to the accounting revaluation, not glass sales.

In fact, Lenskart’s EBITDA (a measure of operating profit) was positive (about ₹856 cr FY24), but the net bottom line never truly got out of the red. In Q1 FY26 (April–June 2025), the company reported ₹61 cr profit on ₹1,940 cr revenue – but even here a ₹5.5 cr one-time gain padded the figures, yielding a net margin <3%. Stripping that out, real profit was even smaller. In retail terms, this is worrying: thousands of stores and millions of online orders have yielded almost no profit.

To drive the point home, here are Lenskart’s core financial trends:

• Revenue Growth: FY23–24: +43%; FY24–25: +17%. (Absolute: ₹4,812 cr→₹5,428 cr→~₹6,415 cr.)
• Operating Expenses: Marketing and tech spend remain high; store count ~2,500, pushing fixed costs. Marketing spend was ₹352 cr in FY24.
• Net Losses: FY22: ~₹102 cr loss; FY23: smaller loss; FY24: ₹10 cr loss; FY25: ₹297 cr profit (mainly one-off).
• Adjusted Profit Estimate: Closer to ~₹130 cr in FY25 after backing out one-offs.
• Profit Guidance: None; the company’s IPO filings sidestep profitability targets and emphasize broad market growth.

Put simply, Lenskart’s financial trajectory shows a large mature chain that is basically breakeven on operations, but not returning much to shareholders. It took a decade of heavy VC funding to even get to this point. Promoters may tout the eventual market (targeting “a billion pairs of glasses”), but investors should note: history of profit creation is weak. The “$10B IPO” asks the public to believe in a future not yet realized.

The Anchor Investors: Big Names, Little Skin

The Lenskart anchor book featured names that would impress any investor’s biography. But the devil lies in the details. It was noted that 22 mutual fund schemes and several insurance fund accounts got allocations in Lenskart’s anchor portion. These 22 funds applied through 59 schemes and collectively took about 35.34% of the anchor pool. SBI Focused Fund, New World Fund, T. Rowe Price IDF – each scored around 3% of total shares. Big-name houses (SBI, Kotak, ICICI Pru, HDFC, Axis) were on the list.

On the surface, it looks like a who’s who of smart money. But recall: this anchor portion was just ₹3,268 cr total. If one fund gets ~3%, that’s roughly ₹100 cr per big fund. By contrast, these funds manage hundreds of thousands of crores. It is calculated that HDFC MF’s take was ~₹50 cr and ICICI Prudential’s ~₹25 cr – less than 0.1% of their AUM.

Even SBI MF (which launched a dedicated Lenskart scheme) got about 3.06% of the anchor (around ₹100 cr), negligible for a fund with ~₹1 lakh cr. In effect, top houses did the bare minimum to be present. If they truly believed in Lenskart, they’d have put a lot more skin in the game. Instead, their jobs apparently were to “lend their names”.

Perhaps tellingly, seven other fund houses refused to play along. Parag Parikh, Nippon India, Tata Mutual Fund and others “skipped the anchor allocation” entirely. No other blame for them; they dodged the fundraising hype trap. One of them was Parag Parikh, known for strict valuation discipline. By contrast, the ones that did participate—often did so grudgingly, with justification statements. DSP’s public explanation reminded everyone: “We invest only when we have conviction across four dimensions… valuations is one among many parameters, but not the sole determinant.”

Of course, those public justifications are only half the story. Merchant bankers reportedly wield enormous power over the IPO anchor process – they choose who gets in and who doesn’t. Industry whispers say the MBs can basically dictate allocations in new issues: invest tiny amounts now if you want bigger plays later, or get cut out. This power dynamic – vaguely alluded to but rarely confirmed openly – underpins the “dirty open secret” of India’s IPO game. No wonder SEBI and AMFI have had to draw lines around pre-IPO deals, limiting funds only to the anchor stage. (Yet some argue that isn’t enough.)

In short, the anchor list is less an endorsement and more a contrivance. As analyst Shankar Sharma said: “using anchor books, or using marquee investors pre-IPO… you can get so much in India because there is so much dumb money.” Retail investors – relying on these names – end up playing the patsy. They see big “brands” on the roster and assume Lenskart must be a steal. What they don’t see is that those brands quietly bought a speck of the company, then slipped out.

A Pattern of IPO Hype: From Lenskart to CarTrade (and Others)

Lenskart’s case isn’t unique; it fits a broader pattern of recent Indian IPOs blowing a big bubble and then fizzling. Veteran market watchers have labeled India’s IPO binge “the dumbest IPO market” in history. The story is eerily repetitive: a new-age company gets floated at a stratospheric valuation with the help of anchor hype, and soon after listing the stock crashes – sometimes dramatically.

Shankar Sharma laid out the playbook: first, float the IPO at a price that “cannot be justified at any metric”, leveraging anchor investor names to build hype. Then, after listing, allow the inevitable: “the stock will fall…50%, 60%, 80% as we have seen”. He cites CarTrade, Nykaa, Zomato, Paytm as textbook examples. All of them had sky-high IPO valuations (Nykaa’s P/E was in the triple digits, Paytm’s listing nearly crashed 100%, etc.), and all eventually slumped far below their issue prices. Retail investors, anchored to the IPO price, often dismiss these crashes as “just a buying opportunity”, instead of re-evaluating the overpriced original.

Let’s see some parallels:

• Mobikwik (Dec 2024): Like Lenskart, Mobikwik’s fintech IPO drew heavy anchor participation (₹257 cr raised) with big fund names (HDFC MF, SBI MF, Axis, etc.). The issue was subscribed 119× and the share surged to ₹698 (June ’25) after listing. But within months, it collapsed – down 65% from its peak to ~₹245 (Mar ’25). Once the anchor lock-in ended, the stock plunged as institutions sold out. Mobikwik had actually swung to a small profit (₹14 cr in FY24), yet investors ended up losing big. The greed-driven hype couldn’t overcome fundamentals, and anchor investors quietly exited at losses.
• Zomato (Nov 2021): An earlier poster child, Zomato came to market with a P/E of about 115×. It doubled on listing day, then slid, and even years later trades far below its first-day price. (Veterans note “see? it always comes back to earth.”) Shankar Sharma lumps it in with Lenskart: “the stock will fall…as we have seen”.
• Paytm (Nov 2021): Once India’s most hyped IPO ($2.5B), Paytm listed below issue price and has since lost over 90% of its value. Again, institutional whispers said anchor participation boomed, but smart money didn’t stick around. Many policyholders blame the “game” of hype.
• CarTrade (Sep 2021): Even profitable CarTrade (FY21 profit ₹60 cr on ₹649 cr revenue) was listed at ~118× P/E (on FY22 numbers). It shot up then nosedived. Reports suggest anchor demand was strong, but its stock too took a dive as retail pressure faded.

Contrast these with an outlier:

• Groww (Nov 2025): The only major tech IPO in the recent bull run to both command hype and deliver real profit. Groww’s anchor round got bids of ~₹50,000 cr (15× the ₹3,000 cr book). Yet Groww had every right to brag: FY25 net profit was ₹1,899 cr on ₹4,056 cr revenue, with an enormous 44.9% net margin. Its IPO P/E was ~33.5× – far below Lenskart’s. In the end, Groww’s anchor hype was backed by fundamentals. (It listed at a slight premium but is trading slightly below.) It stands as a benchmark for how a new-age IPO should be priced: good earnings and reasonable multiples.

Lenskart, in contrast, had neither. Its valuation was pegged at ~13× revenue but on extremely thin profit (or losses). It’s telling that even Shark Tank judge Peyush Bansal (unrelated but an eyewear vet) refused to comment positively, suggesting the IPO was “a mockery” of investor trust.

Retail Investors and the Fallout

For individual investors, the Lenskart IPO has been troubling. The stock listed on November 10, 2025 and initially did pop, but then turned volatile. (By contrast, comparable retailers have shown tepid performance.) The grey market perspective – often a pulse-check on IPO sentiment – was muted by listing day. As India Today noted, GMP was only ₹42, forecasting a +10% listing gain. Analysts had warned that barrages of subscription can mask weak footing: “numbers look stellar on paper, but heavy oversubscription often reflects short-term excitement rather than deep conviction”.

The real tragedy is when retail investors buy into the brand names and momentum, only to get squeezed later. After Lenskart’s lock-in ends, the fate may mirror Mobikwik’s collapse. As anchor investors exit at the first chance (or sell gradually into the market), unsophisticated holders will see their portfolios hit. Meanwhile, those mutual funds and insurers that “invested” in anchor will quietly trim or exit if Lenskart disappoints – they hinted as much to regulators.

Should Regulators Intervene?

The uncomfortable truth revealed by the Lenskart saga is that market forces alone haven’t prevented this charade. When anchor investors earnestly believed in the business, stocks should soar permanently. Instead, we’re seeing a cycle of hypnotize and dump. After Lenskart, some industry voices urge action: since SEBI already banned mutual funds from pre-IPO deals last year, maybe the next step is to prohibit MF/insurers/pension funds from anchor slots in big IPOs as well. This would strip merchant bankers of a key tool.

It was reported that SEBI has clarified only anchor-stage investment is allowed by MFs (pre-IPO placements are off-limits). But critics say that’s inadequate. If even anchor investments are being used as bargaining chips, it may be time for a tougher line. Already SEBI has increased anchor quotas from 33% to 40% of each IPO to ensure institutions genuinely participate, but perhaps enforcing quality of participation matters more. Some suggest institutional clients should disclose what percentage of each fund’s net asset is tied up, or hold MFs to account if they keep selling as soon as listing begins.

Regulators face a quandary: they want deep institutional participation in IPOs, yet also fair markets. SEBI’s October 2025 move to bar MFs from pre-IPO slots acknowledges risks of “dumb money” chasing early deals. If retail investors are being duped by an anchor facade, tougher measures may be justified. After all, even though anchor funds are “technically insiders”, their token bets hardly help the company or genuine price discovery; they mainly serve a marketing function.

One rule could be to cap single-investment exposure in an IPO to a small fraction of AUM – ironically to ensure funds either truly buy big if they like it, or stay out. Another idea: tighten disclosures around anchor allotments. Or simply let the dust settle: perhaps as more data emerges about how many anchors truly exit after listing, public scrutiny will punish the scheme.

At the end: Behind the Smoke and Mirrors

The Lenskart IPO is a stark reminder of why investors must look beyond the glitter. On the surface, it had all the trappings of a success story: a venerable founder, a booming industry (India’s eyewear market), and top-tier institutional backers. Dig deeper, however, and the numbers don’t add up. Underneath the shiny façade are flat growth, razor-thin profits, and an institutional anchor game that feels more like a protection racket than an endorsement.

This isn’t just about Lenskart. It’s symptomatic of a market that has been intoxicated with IPO fever. Time and again, we see stellar oversubscriptions turn into punishing sell-offs when fundamentals matter. Shankar Sharma’s assessment still rings true: our IPO market has become dangerously “dumb” in pursuit of quick gains. If retail investors burn their fingers this time, perhaps it will spark a reckoning.

For now, the lesson is clear: don’t be blinded by big names on an anchor sheet or a flashy oversub number. Demand transparency: How much is each big fund really committing? Why is it investing so little if it believes so much? Regulators might yet step in – but until then, retail investors must protect themselves by scrutinizing the numbers, not the spectacles.

Lenskart’s IPO came with unsettling signs – losses turned profit through one-offs, margins under 2%, and an anchor book inflated by token institutional bets. Valuations soared to a price/earnings of hundreds, far above any logical peers. The anchor investor drama – big names but tiny stakes – hints at a manipulative churn. Compare to other recent IPOs (Mobikwik’s 65% slide from its high, etc.), and a warning emerges: where there’s smoke of hype and anchors, watch for fire of losses.