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Long runway for growth and margin expansion

* Since its listing (Nov’25), Lenskart’s share price has risen ~70%. We note that the strong performance has largely been driven by strong earnings momentum, leading to consistent upgrades in consensus estimates (FY28 PAT up by ~30%) and roll-forward, rather than multiple re-rating (~8.5%).

* Given its best-in-class store economics (store payback in <10 months, 33%+ store EBITDA margin), limited organized competition, under-penetrated category, and robust FCF generation (despite front-ended capex for Hyderabad plant), we expect Lenskart to ramp-up store additions and reach ~4.5k stores in India by FY29 (vs. ~4.3k stores earlier).

* Lenskart’s international segment margins have consistently surprised us, with the company achieving 10.5% pre-IND AS EBITDA margin in 1QFY27 (vs. our initial estimate of ~9.2% by FY28). Notably, the strong margin performance was despite a sharp ~45% YoY growth in marketing spends (~50-60bp higher YoY) during the last two quarters.

* We raise our FY27-28E consolidated pre-IND AS EBITDA by 4%/8%, driven by higher store additions in India and better operating leverage both in India and international.

* We model 27%/46%/59% CAGR in revenue/pre-IndAS EBITDA/adj. PAT over FY26-29E, driven by ~29%/25% revenue CAGR in India/International. We expect pre-IND AS EBITDA margin to expand to 19.4%/13.5% in India/International by FY29.

* We reiterate BUY with a revised TP of INR800, based on a 49x Sep’28 blended pre-Ind AS EBITDA multiple (55x for India, ~37.5x for Int’l).

Earnings momentum rather than multiple re-rating driven stock outperformance

* Since the listing, Lenskart’s share has delivered ~70% return. Our analysis of stock price decomposition suggests that earnings surprises, leading to consensus estimate upgrades, along with roll-forward, have been the key drivers of stock outperformance, rather than multiple re-rating.

* Driven by strong growth and operating leverage, consensus has upgraded Lenskart’s FY27-28 post IND-AS EBITDA by ~18-20% and PAT by ~27-30% since Dec’25. Comparatively, our FY27-28 pre-IND AS EBITDA estimates have increased by ~26-29% and FY27-28 PAT by ~36-43%, driven by stronger margin performance in international operations.

* Earnings upgrade, coupled with roll-forward, have been the key driver, while the two-year forward P/E multiple has re-rated by a modest ~8% to ~86x (vs. Dec’25), suggesting an earnings-led stock price performance

Long runway for sustaining 25%+ revenue growth

* Lenskart has among the best-in-class store economics among listed retailers (~10 months store payback across India and International operations).

* Moreover, we believe the store economics has room for further improvement as newer stores hit maturity and benefits of backward integration are reflected in higher product margins (currently impeded by rupee depreciation).

* Despite operating one of the largest retail networks in India (2,725 stores), we believe the runway for store expansion remains large, given the category underpenetration and limited organized competition.

* We believe Lenskart can potentially add 10k+ stores over the medium term through densification in its existing footprint (1.8k+ pincodes), entry into unserved pincodes within existing cities (~2.7k), and foray into new economically viable towns (~3.5k+ pincodes).

* Further, despite front-ended capex for the Hyderabad plant, the company has been able to generate FCF in FY26 and 1QFY27, with its cash balance rising to INR41b.

* Over FY26-29, we expect Lenskart to generate INR53b in cumulative pre-IND AS OCF and with likely tapering of Hyderabad capex, we expect significant FCF generation (INR32b cumulative), which the company could use to fund growth through accelerated store additions and expand into new markets internationally.

* We now build in ~1,900 store additions in India over FY26-29 (vs. ~1,700 earlier), while we bake in modest ~2.5%/3.5% annual growth in per store volume/ASP, as compared to ~18% reported SSSG in 1QFY27.

Margin inflection underway across India and International operations

* Lenskart’s profitability expansion has been ahead of its revenue growth, with significant operating leverage seen across India and International operations.

* We note that profitability has been far ahead of our initial expectations, with Lenskart achieving our FY27 pre-IND AS margin estimate in India and our FY28 pre-IND AS margin estimate for the International business by 4QFY26.

* Going ahead, we build in ~395bp margin expansion over 1QFY27-FY29 for the India business to reach ~19.4% pre-IND AS EBITDA margin by FY29. Notably, commissions/incentives still account for ~3.3% of Lenskart’s India revenue, which will likely reduce to zero as Lenskart transitions entirely to the COCO model.

* Similarly, we build in ~300bp margin expansion over 1QFY27-FY29 for the International business to achieve ~13.5% pre-IND AS margin by FY29. We believe with focus on SSSG-led growth rather than aggressive store expansion, the room for operating leverage in international business is significantly higher.

Valuation and view

* Lenskart has built strong moats in a difficult-to-scale category through:

i) a centralized, highly automated manufacturing facility;

ii) strong backward integration;

iii) large omnichannel presence;

iv) leveraging technology to ease constraints in scaling up; and

v) house-of-brands architecture spanning mass to premium eyewear. Please refer to our IC for detailed thesis on Lenskart.

* We raise our FY27-28E consolidated pre-IND AS EBITDA by 4%/8%, driven by higher store additions in India and operating leverage across India and Int’l.

* We model 27%/46%/59% CAGR in revenue/pre-Ind-AS EBITDA/adj. PAT over FY26-29E, driven by ~29%/25% revenue CAGR in India/Int’l. We expect pre-IND AS EBITDA margin to expand to 19.4%/13.5% in India/International by FY29.

* We reiterate BUY with a revised TP of INR800 (earlier INR705), based on an 49x Sep’28 blended pre-IndAS EBITDA multiple (55x for India, ~37.5x for Int’l).

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