Persistence Capital declines Lenskart IPO amid valuation debate, industry scepticism

The high-profile listing of Lenskart has sparked yet another valuation debate across India’s capital markets, as Persistence Capital, an alternative investment fund, publicly announced that it chose to skip participation in the eyewear retailer’s IPO. The fund’s candid disclosure on X (formerly Twitter) has added a new twist to the ongoing conversation about inflated valuations and shifting investor sentiment in the consumer-tech IPO space.

In its post, Persistence Capital stated, “We are proud to say that we also skipped this IPO. We will not comment on whether we were approached in the first place.” The declaration quickly gained traction among market watchers, many of whom view it as a rare public stand by a domestic fund amid what has been a frenzy of institutional interest in Lenskart’s public issue.

When a user on X jokingly suggested that Lenskart’s CEO, Peyush Bansal, may have personally pitched to the firm, Persistence Capital replied, “We asked him about LASIK and the call dropped. It was definitely the network.” The humorous response underscored both the transparency and tension dominating social media debates around Lenskart’s valuation — widely considered one of the priciest among India’s new-age consumer-tech IPOs.

Valuation concerns

Lenskart’s IPO, priced between Rs 382 and Rs 402 per share, values the company at around Rs 69,700 crore — a figure that has divided opinion among investors and analysts alike. The offering carries a price-to-earnings multiple of 235–238 times FY25 earnings, making it one of India’s most expensive listings.

Critics argue that such lofty valuations leave little room for upside. Sandeep Tandon, founder and CIO of Quant Mutual Fund, called the current IPO euphoria “stupidity.” He questioned the willingness of Indian investors to pay valuations that even U.S. markets would not assign to similar companies. “If the U.S. is not willing to pay these valuations, why should we? This is stupidity on our part,” Tandon said, warning that the risks are “massive” given that 60% of newly listed companies trade below their issue price.

Veteran investor Shankar Sharma also joined the conversation, telling NDTV Profit, “I have no interest in the Lenskart IPO… I never met Peyush Bansal.” Sharma raised doubts about the Rs 70,000 crore valuation, pointing out that the stock trades at over 10x price-to-sales and 230x earnings, metrics he considers “extremely stretched.” Sharma likened the current IPO hype to past cycles of overvaluation, saying, “India’s IPO market hasn’t changed — hype, oversubscription, and post-listing crashes are still the norm.”

Strong anchor participation

Despite the pushback, Lenskart managed to raise Rs 3,268 crore from 147 anchor investors, including a robust participation from 21 domestic mutual funds and major global players such as Fidelity, BlackRock, T. Rowe Price, JP Morgan, and the Government of Singapore. Domestic participants included SBI MF, HDFC MF, ICICI Prudential MF, Kotak MF, Axis MF, and Aditya Birla Sun Life MF, reflecting strong institutional confidence in the company’s growth potential.

This institutional enthusiasm contrasts with the caution voiced by funds like Persistence Capital, highlighting the polarised investor sentiment in India’s IPO market — particularly around high-growth, low-profit consumer brands.

IPO as a market barometer?

Lenskart’s IPO has quickly evolved into a litmus test for investor appetite in India’s next wave of consumer-tech listings. While the company boasts strong revenue growth, a solid omni-channel model, and a rising global footprint, analysts remain divided on whether these fundamentals justify its sky-high valuation.

As the listing date nears, the contrast between institutional participation and public scepticism continues to define market sentiment. For many, Persistence Capital’s blunt refusal encapsulates a broader caution taking root in India’s overheated IPO landscape — one where not every high-profile brand translates into sustainable market success.

Whether Lenskart’s stock follows the surprise post-listing rally of Honasa Consumer (Mamaearth) or encounters resistance, its performance is expected to set the tone for upcoming consumer-tech IPOs and reframe discussions around how much investors are willing to pay for growth in India’s new economy.