Lenskart shares rally 11% on sharp target revisions; what UBS, Goldman Sachs, HSBC say

Lenskart Solutions Ltd shares rallied 11 per cent in Thursday's trade amid sharp upward revisions in target prices by a handful of domestic and foreign brokerages. These included UBS, which raised its target on Lenskart to Rs 850 from Rs 800 earlier, calling it one of the most compelling compounding stories in India's consumer sector. Morgan Stanley raised its target to Rs 805 from Rs 718.

ICICI Securities now values the stock at Rs 800, up from Rs 700 earlier. Goldman Sachs raised its target to Rs 800 from Rs 715, Emkay to Rs 800 from Rs 775, CLSA to Rs 773 from Rs 743 and Antique Stock Broking to Rs 660 from Rs 600.

On Wednesday, the scrip rose 11.05 per cent to hit a high of Rs 767.40 apiece.

Analysts said Lenskart has built strong moats in a difficult-to-scale category through a centralised, automated manufacturing facility and logistics network, strong backward integration and a large omnichannel presence.

HSBC upgraded the stock to 'Buy' and raised its target price to Rs 790 on higher estimates and a higher valuation multiple for its international business. Following the Q2 results, the foreign brokerage said its key upgrades were in India Ebitda margins, where the pace of expansion was higher, leading to an 8 per cent increase in its FY28 Ebitda estimates. For the international business, HSBC assumed higher growth and greater margin improvement.

"Our store expansion is higher than management estimates as we expect a pick-up. This drives a 17 per cent increase in international FY28e EBITDA. We roll forward our valuation to December 2027 and increase the international business target EV/EBITDA to 40x, from 30x, reflecting greater confidence in its growth and margin, while retaining 45x for India," it said.

UBS said Lenskart is a disruptor and a structural winner in the prescription eyewear category through its vertically integrated manufacturing, retail and brand ownership, and aggressive growth strategy.

Goldman Sachs said Q2 was another strong quarter for Lenskart, with the company now scaling up new initiatives. Lenskart's store network grew by 143 net stores to a total of 2,868 in India. Its management guided that FY27 store additions would be in line with FY26, with continued expansion in Tier II cities. International revenue grew 30 per cent year-on-year (YoY), with constant-currency growth of 23 per cent, largely driven by same-store sales growth (SSSG).

"With AI at the core across business functions and owned supply chain/retail, Lenskart continues to target steady-state Ebitda margin of 25 per cent, though the near-term focus remains on growth. Notably, Lenskart delivered FCF in 1H, after funding its entire expansion and manufacturing investments of Rs 750 crore through internal accruals," Emkay said.