The Lenskart IPO valuation debate

The #LenskartIPO has split the market right down the middle. One camp is ridiculing the lofty valuation, while the other is busy justifying it.
Last time we saw such a heated debate was during the #Zomato IPO, where even the 'valuation guru' himself questioned the price!
Fast forward less than 5 years, Zomato is now part of the #NIFTY Index.

Coming back to #Lenskart, the key controversy stems from the fact that the #founder reportedly bought back shares around 6 months ago at a $1 billion (Rs 8500 cr) valuation, and now wants investors to subscribe at a Rs 70000 cr valuation!

But here’s the thing, this phenomenon isn’t new. Founders buying company shares from investors at deeply discounted valuations ahead of an IPO have happened before; some of the prominent examples are Swiggy and FirstCry.

Why would investors agree to this?
While I couldn't get a proper response from #ChatGPT, I personally believe the most plausible explanation is a form of “#bonus” or #reward from investors to the founders, who’ve driven the company through years of hard work and are now steering it toward a blockbuster listing. This also helps in cleaning up the cap table before a listing.

Now, looking at Lenskart’s numbers:
- In June 2024, they raised $200 million at a $5 billion valuation.
- With Rupee depreciation and strong expansion, a ₹70,000 crore (≈$8B) valuation isn’t entirely irrational.

But the counterview is equally valid -
Financials don’t fully justify the tech-style multiples, and with #PhysicalStores mushrooming across every lane, it feels more like a retail chain with tech enablement, not a pure tech company.

So, will the IPO be a success or flop?
Most likely a success, because, let’s face it, very few investors today are doing deep analysis. Trends, momentum, and speculative sentiment are driving IPO subscriptions more than fundamentals.

Are you investing in Lenskart? If so, why?