Lenskart store expansion and vertical integration underpin growth and margin outlook

Investment View and Recommendation

In its initiating-coverage report dated 21 August 2026, ICICI Securities Limited starts coverage of Lenskart Solutions with a BUY rating and a target price of Rs 750, compared with the CMP of Rs 655. The constructive view rests on sustained operating outperformance, a long runway for organised eyewear penetration, rapid India store expansion, premiumisation and international scaling.

ICICI Securities considers Lenskart's vertically integrated design, manufacturing, physical distribution and digital channels a meaningful competitive moat, notwithstanding what it describes as rich valuations.

Growth Outlook and Financial Estimates

ICICI Securities estimates that Lenskart's India business can deliver revenue CAGR of about 23 per cent during FY26-FY31E as its store base almost trebles by 2.7 times and same-store sales growth, or SSSG, averages about 18 per cent. India EBITDA could grow at about 37 per cent CAGR through scale efficiencies.

For FY26-FY28E, the broker estimates consolidated revenue CAGR of about 25 per cent and pre-Ind AS EBITDA CAGR of 54 per cent, with the EBITDA margin expanding from 11.2 per cent in FY26 to 17 per cent in FY28E. It forecasts PAT CAGR of about 68 per cent over FY26-FY28E.

India and International Expansion

The broker expects India stores to rise to 3,979 by FY28E, supporting India revenue of Rs 82,259 million and an increase in domestic market share from about 6 per cent to about 7 per cent. About 40 per cent of incremental India revenue is attributed to new store additions and about 60 per cent to SSSG. International stores are estimated to reach 843 by FY28E, with revenue increasing to Rs 59,547 million, led by Japan, Southeast Asia, the Middle East and other markets.

Unit Economics and Operating Moat

The investment case is supported by Lenskart's unit economics. ICICI Securities estimates India product margins of about 64 per cent, store-level pre-Ind AS EBITDA margins above 33 per cent and store payback of roughly 10 months, versus 20-30 months or more for peers.

In-house design and manufacturing, supported by 75 per cent automated plants, enable procurement of key eyewear materials at 35-40 per cent lower cost than unorganised retailers for similar quality. Next-day delivery in 78 cities, centralised inventory and an asset-light store model reinforce the cost and speed advantage.

Technology also supports demand creation. Remote optometry expanded to 623 India stores at FY26-end from 168 at FY25-end, while digitally influenced sales reached about 50 per cent of India sales in FY26.

Premiumisation and International Profitability

Premiumisation is another growth driver. Lenskart's multi-brand portfolio, including Owndays, John Jacobs and Vincent Chase, serves different price points. The Rs 10,000-plus transaction band increased to about 20.5 per cent of India revenue in FY26 from about 18.1 per cent in FY25, while the sub-Rs 2,000 band declined to 16.2 per cent.

International product margin was about 76 per cent in FY26 versus about 64 per cent in India. However, international pre-Ind AS EBITDA margin was lower at about 7 per cent because of higher rent and employee-cost ratios and a smaller store base.

Valuation and Scenario Analysis

ICICI Securities values Lenskart using a three-stage DCF with a 10.5 per cent WACC and a 5 per cent terminal growth rate, deriving a target price of Rs 750.

At this target, the broker's domestic peer regression implies 48 times FY28E EV/EBITDA for the India business, while the international business is implied at 20 times. ICICI Securities views these levels as reasonable against the 8-19 times global-peer range, given Lenskart's higher growth.

Key Risks

• Slower-than-assumed eyewear penetration, affordability constraints and price compression from a well-capitalised competitor.
• China-linked sourcing exposure to currency movements, tariffs and regulations.
• Store-rollout challenges, including site availability, rent, regulatory delays and staffing.
• Weaker manufacturing yields, stalled premiumisation or elevated marketing intensity.
• Acquisition-related free-cash-flow and integration risks.
• Founder dependence, regulatory risks and foreign-exchange risks.
• Lower demand for corrective eyewear if procedures such as LASIK and SMILE become more accessible.