Lenskart IPO of Rs 8,000 crore: Check the risks before committing funds

Kolkata: The IPO rush in India has turned into a frenzy. Diwali is gone but there is no end to the fireworks in the new issue market. Prominent eyewear brand Lenskart has lined up an IPO to raise nothing less than Rs 8,000 crore. This will make it the fourth biggest IPO in 2025 after Tata Capital, LG Electronics India and HDB Financial Services.

Reports say the company will announce the price band of the shares next week. But before investing, it is worth having a look at the risk factors of the company. A careful perusal of the risk factors is a necessary step for potential investors in any public issue. Let's have a look at what's involved in this public issue.

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The Lenskart IPO is designed to raise Rs 2,150 crore through fresh shares. The rest will be garnered through OFS shares. The company is backed by prominent investors like Temasek and KKR. It has been reported that Piyush Bansal, one of the founders, will sell 2.05 crore shares. Other founder-shareholders such as Neha Bansal, Amit Chaudhary, and Sumeet Kapahi will also sell their stakes. Kotak Mahindra Capital, Morgan Stanley, Citi, Avendus, Axis Capital, and Intensive Fiscal Services have been appointed as lead managers for this IPO.

Lenskart Solutions was set up in 2008. It is involved in various aspects of the eyewear market -- designing, manufacturing, branding and retailing prescription eyeglasses. It also sells sunglasses, contact lenses and sundry accessories. India is the main market of the compamny that is also active in a few other markets such as Japan and Thailand. In the last financial year (FY25), it launched as many as 105 new collections including collaborations with well-known brands and personalities. Till the end of the last financial year, Lenskart operated 2,723 stores in all of which about 76% were in India. The company is also known for offering remote eye testing services.

A few risk factors are associated with this high-profile company. Lenskart manufactures frames in India but the raw materials mainly come from China. A joint venture company with Baofeng Framekart Technology does this raw material procurement and supply. Any delay/disruption at this point might adversely impact the revenue and profits of the company. Also raw material costs account for about 24.5% of the total expenses of Lenskart. Price fluctuations can dent margins.

The company's manufacturing unit is in Gurugram Industrial Cluster, where production and logistics are not very smooth. Disruption at this point could injure operations of the company. Lenskart has concluded an MoU with the Telangana government to build a factory in Hyderabad. The performance of the firm will also depend on how fast and smoothly it can pull off this expansion in production. Also a significant portion of Lenskart's revenue reportedly comes from Lenskart Gold membership customers. Decline in the number of this category of customers could adversely impact revenue and profits.