Lenskart Solutions stock hit a new 52-week high of ₹627 on Thursday, reacting to robust June quarter (Q1FY27) earnings. It is now up nearly 50% from its public issue price.
Consolidated revenue grew 34% year-on-year to ₹2,714 crore in Q1FY27, with the revenue mix skewed towards domestic business at 57%. However, the striking aspect this time was the sharp 610 bps expansion in Ebitda margin (pre-Ind AS) in international operations to 10.6%.
Global margins
Almost the entire constant-currency revenue growth of 29% year-on-year in the international business came from same-store sales growth (SSSG). Consequently, operating leverage translated into higher margins. Eyewear unit volumes grew 37.6%, while international growth was led by broad-based growth across Japan, Southeast Asia and West Asia.
“Margin improvement in international business should put a key investor concern to rest,” said Jefferies India. Lenskart will replicate its India playbook in international markets and would prioritize accelerating growth in Thailand in the years to come.
India witnessed SSSG of 18% in Q1FY27 versus 16% in Q1FY26, so margin rose 210 bps to 15.4%. Consolidated Ebitda (pre-Ind AS) almost doubled year-on-year to ₹361 crore.
Cash conversion
Lenskart was able to convert 82% of its Ebitda into operating cash flow (OCF) of ₹297 crore in Q1FY27. While expansion-related capex reduced free cash flow (FCF) for Q1FY27, investors are likely to tolerate growth-capex-led reduction in FCF more than a reduction caused by maintenance capex.
Lenskart opened 116 new stores in India versus 16 stores abroad in Q1FY27. Total store count in India stands at 2,725 stores versus 734 abroad. Lenskart can potentially have 10,000 stores in India in the long term, almost four times its current size. Sustaining profitability of new stores will be a key monitorable.
As far as its ₹500-priced eyewear offering is concerned, the management said lower price points are more margin-accretive in terms of percentage profitability, even though there is more money to be made in absolute terms from higher-priced products.
Localizing supply
Meanwhile, analysts have cautioned about Lenskart’s high import dependency on China ever since its listing in November. The company is therefore trying to localize manufacturing of eyewear.