The initial public offering (IPO) of Lenskart, the popular eyewear company, has garnered significant investor interest on its second day of bidding. The issue has been oversubscribed 1.99 times overall, with retail investors showing particularly strong enthusiasm.

Subscription Details

IPO Highlights

• Price Band: ₹382 - ₹402 per share
• Valuation Target: Exceeding ₹69,700 crore
• Issue Structure:
  • Fresh issue of ₹2,150 crore
  • Offer for sale of 12.75 crore equity shares

Key Points

• Lenskart successfully raised ₹3,268 crore from anchor investors prior to the IPO opening.
• The offer for sale includes shares from promoters Peyush Bansal, Neha Bansal, Amit Chaudhary, Sumeet Kapahi, and other investors.
• Proceeds from the fresh issue will be utilized for:
  • Capital expenditure
  • Establishing new company-operated stores
  • Business promotion
  • General corporate purposes

The strong response to Lenskart's IPO, particularly from retail investors, suggests a high level of confidence in the company's business model and growth prospects.

DSP Mutual Fund has recently defended its decision to invest in Lenskart's Initial Public Offering (IPO), addressing criticism on social media regarding the eyewear retailer's valuation. The fund house emphasized its investment strategy, which is based on four key factors: strong business fundamentals, trustworthy promoters, demonstrated execution capabilities, and valuations.

Investment Rationale

DSP Mutual Fund expressed confidence in Lenskart's business model, management, and execution track record. However, they acknowledged the current high valuations in the retail and e-commerce sectors, including Lenskart. To manage this, the fund made the investment by trimming a slower-growing position with similarly expensive valuations, highlighting their approach to careful position sizing in stretched valuation scenarios.

IPO Performance

Lenskart's IPO has shown strong initial demand:

The IPO opened with full subscription on its first day, indicating significant investor interest. The offering is scheduled to close on November 4.

DSP's Investment Approach

DSP Mutual Fund's investment decision in Lenskart aligns with their broader strategy:

1. Strong Business Model: Confidence in Lenskart's business fundamentals
2. Trustworthy Promoters: Faith in the company's management
3. Demonstrated Execution: Proven track record of business performance
4. Valuation Considerations: Acknowledgment of high valuations in the sector

The fund's approach to managing the investment in a high-valuation environment includes:

• Trimming positions in slower-growing, similarly expensive stocks
• Careful position sizing to mitigate risks associated with stretched valuations

This defensive stance by DSP Mutual Fund underscores the ongoing debate in the investment community about balancing growth potential with valuation concerns, particularly in the dynamic retail and e-commerce sectors.

As the Lenskart IPO progresses, investors and market observers will be keenly watching how this high-profile offering performs, potentially setting the tone for future investments in the rapidly evolving Indian e-commerce landscape.