Is Lenskart worth $10 Billion? An analysis

Lenskart is looking at going public at a $10 Billion (₹84,000 Cr) valuation. In FY24, it had made a ₹10 Cr loss at a revenue of ₹5,427 Cr.

While very close to profitability (though not quite there yet), the company has shown quite a lot of promise. Considering that it had made a loss of ₹63 Cr at a revenue of ₹3,788 Cr in FY23, growth of about 43% YoY is no small feat.

But still, what looks strange is that $10 Billion valuation tag. Where is that coming from?

Considering that the company goes on to show revenues of about ₹8,400 Cr ($1 Billion) in FY25 (very ambitious, but let's go with it), with a net profit of about ₹200 Cr (again, very ambitious, but okay) - how does it make Lenskart worth $10 Billion? Even at that scale, it'd mean a revenue multiple of 10x!

Let's take Lenskart's peers in comparison. There's EssilorLuxottica and Warby Parker in the west. And then Titan Eye+ here in India. What are their multiples?

Essilor is a huge, mature, global giant. A literal cash machine. It owns brands like Ray-Ban & Oakley, is a license maker for houses like Chanel & Prada, owns stores, and sells wholesale. It also dominates lenses, which are the high-margin part of the eyewear business. The company made $30B+ revenues with about $4B in profit (net) at 60–65% gross margins.

What's its market cap? About $130 Billion.

So what's the revenue multiple (of Lenskart's biggest peer)? 4x.

Some can say it's because Essilor is a mature company which is only growing at 6%. Lenskart is growing way faster. Though there are atleast 10 factors working in Essilor's favour to counter that, let's leave it behind.

Let's talk about Warby Parker. Lenskart's true peer in the west due to its D2C, more online than offline in nature.

Warby did a revenue of $771 M in FY24 (as compared to $671M of Lenskart). Like Lenskart, Warby also posted a slight loss in FY24, and is looking at a small profit in FY25 (its Q1 of FY25 was profitable at net). And at a scale slightly ahead of Lenskart, it's also looking at growth rate of about 15% (which is what Lenskart will also be showing in the years to come, optimistically).

What's Warby Parker's market cap? $2.8 Billion.

So what's its revenue multiple? 3.3x

Now I wish I could say that let's just leave Essilor and Warby Parker behind, and compare Lenskart with something like Titan Eye+. But unfortunately, that won't be logically sound as Titan Eye+ isn't a standalone company (it's a part of a large group).

Despite that, if you look at Titan, which is a cash machine on steroids, doing revenues of about $7B with roughly $500M in net profits every year, with growth of 37% YoY AT THAT SCALE.

What's its market cap? $36 Billion.

So what's the revenue multiple Titan? With all that growth and real profits to show for? 5x.

Now when you think about a current revenue multiple of about 15x for Lenskart, or a forward multiple of way over 10x. Does it make sense?

I don't know. I'm on the fence. Maybe, maybe not. But I wish them luck!

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