Lenskart Reports Rs 297 Crore Profit, Boosted by Accounting Gain from Owndays Acquisition

Lenskart Solutions, the eyewear retail giant, has reported a significant turnaround in its financial performance for the fiscal year. The company posted a net profit of Rs 297.00 crore on revenues of Rs 6,652.00 crore, marking a substantial recovery from the previous year's loss of Rs 10.00 crore.

Financial Highlights

Metric	FY 2022-23	FY 2021-22
Revenue	Rs 6,652.00 crore	Not provided
Net Profit	Rs 297.00 crore	Rs (10.00) crore (Loss)
Adjusted Profit*	Rs 130.00 crore	Not provided
Adjusted Net Margin	1.90%	Not provided

*Adjusted for one-time, non-cash gain

Key Insights

Accounting Gain Impact: A significant portion of Lenskart's profit, Rs 167.00 crore, came from a Fair Value Through Profit or Loss (FVTPL) gain. This non-cash item is related to the revaluation of deferred payments from the company's acquisition of Owndays in 2022.
Adjusted Profitability: After accounting for the one-time gain, the adjusted profit stands at approximately Rs 130.00 crore. This translates to a net margin of 1.90% based on the reported revenue.
Valuation Perspective: At the upper IPO price band of Rs 402.00 per share, Lenskart's price-to-earnings (P/E) multiple is nearly 535 times its normalized earnings. This high multiple suggests investors are pricing in significant future growth expectations.
Business Operations: Lenskart operates over 2,500 stores and maintains an omni-channel retail network. The company boasts impressive gross margins of 70.00%, indicating strong pricing power and operational efficiency.
IPO Details: As part of the initial public offering (IPO), promoters are selling Rs 1,100.00 crore worth of shares through an offer for sale.

Recent Performance

For the quarter ending June 2023, Lenskart reported:

Metric	Q1 FY 2023-24
Revenue	Rs 1,940.00 crore
Net Profit	Rs 61.00 crore
Adjusted Profit*	Rs 55.50 crore
Adjusted Profit Margin	2.86%

*Adjusted for Rs 5.50 crore accounting gain

The company's performance in the June quarter shows a slight improvement in profit margins compared to the full fiscal year, with an adjusted profit margin of 2.86%.

Conclusion

Lenskart's financial results demonstrate a significant turnaround from the previous year's loss. However, it's crucial for investors to consider the impact of one-time accounting gains on the reported profits. The company's strong revenue growth and high gross margins indicate a robust business model, but the high P/E multiple based on normalized earnings suggests that the market has priced in substantial future growth expectations.

As Lenskart moves forward with its IPO plans, potential investors should carefully evaluate the company's underlying operational performance, growth strategy, and market position in the competitive eyewear industry.

Lenskart Solutions, the popular eyewear company led by Peyush Bansal, is set to make its debut on the stock market with its Initial Public Offering (IPO) scheduled to open on October 31. The company, backed by notable investors such as Softbank, ADIA, Temasek, and Kedaara Capital, aims to raise Rs 2,150 crore through a fresh issue of shares.

IPO Details

Particulars	Details
IPO Opening Date	October 31, 2023
Fresh Issue Size	Rs 2,150 crore
Offer for Sale	12.75 crore equity shares

Key Highlights

Fresh Issue: Lenskart plans to raise Rs 2,150 crore through the issuance of new shares.
Offer for Sale: In addition to the fresh issue, promoters and existing investors will sell 12.75 crore equity shares as part of the offer-for-sale (OFS) component.
Backing: The company boasts support from prominent investors, including Softbank, Abu Dhabi Investment Authority (ADIA), Temasek, and Kedaara Capital.

Company Background

Lenskart Solutions, under the leadership of Peyush Bansal, has established itself as a significant player in the Indian eyewear market. The company's decision to go public marks a crucial milestone in its growth journey and reflects the increasing investor interest in the eyewear sector.

Market Impact

The Lenskart IPO is likely to draw considerable attention from both institutional and retail investors, given the company's strong brand presence and the growing demand for eyewear products in India. The success of this IPO could potentially pave the way for more e-commerce and direct-to-consumer brands to consider public listings.

Investors and market watchers will be keenly observing the response to Lenskart's IPO, as it could provide insights into market sentiment towards new-age retail and e-commerce companies in the current economic climate.

As always, potential investors are advised to carefully review the company's prospectus and consider their financial goals before making any investment decisions.