Report Interpretation

Overview

Nomura’s initiation report argues that Lenskart can turn India’s low eyewear penetration and fragmented retail structure into sustained growth through a vertically integrated, technology-enabled retail model. It also expects international operations and premium lens mix to lift profitability.

Core views

Nomura argues that Lenskart’s principal opportunity is category creation rather than simply taking share. India’s eyewear market is projected by Redseer to grow at a 13% CAGR from INR788bn in FY25 to INR1,483bn in FY30E. Refractive-error prevalence is expected to rise from 53% to 62% of the population over the same period, while prescription-eyeglass penetration is only 35%, compared with 69% in Japan and 88% in the US. The report also highlights a shift toward organized retail, whose share is projected to rise from 24% in FY25 to 31% in FY30E, as well as a consumer shift from eyewear as a medical need toward fashion and repeat purchases. The India expansion thesis rests on a large mapped store opportunity and evidence that new stores are generating demand. Lenskart had 2,725 India stores across 600+ cities and added 604 net new stores in FY26. It has identified more than 6.1k unserved pin codes—c.2.6k in existing cities and c.3.5k in new towns—plus c.3k potential stores from densification. Nomura notes that 455 net additions in the prior three quarters used only c.5% of the mapped whitespace. FY26 same-pincode sales growth of 27.3% exceeded same-store sales growth of 20.8% by 650bp, which the report interprets as evidence that densification creates demand rather than materially cannibalizing it. Average monthly store revenue was INR1.8mn and c.80% of stores achieved payback within 12 months; GeolQ’s 3k+-variable site-selection process delivered c.81% success in new-store payback within 12 months. Technology and vertical integration are central to the report’s moat argument. India has only c.8k practising optometrists against an estimated c.40k requirement, historically constraining physical expansion. Lenskart’s remote-optometry model scaled to 786 India stores, with 164 optometrists serving stores from hubs in Kolkata and Gurugram; remote tests increased 330% year-on-year. The company conducted c.24mn eye tests globally in FY26, up 48.7% year-on-year, with c.50% of India tests being first-time examinations. Nomura views this as direct evidence of demand creation and as a means of expanding into Tier 2+ locations where recruitment is difficult. The report says centralized, automated manufacturing lowers cost while enabling broad assortment and faster fulfilment. Lenskart manufactured 17.5mn prescription eyeglasses in FY26, versus 13.2mn in FY25, using centralized facilities including Bhiwadi and Gurugram. Bhiwadi is 75% automated, while its robotic lens systems can cut and customize up to 27 prescription eyeglasses per minute. The average frame and lens cost is stated to be 35-40% below the India industry benchmark. Centralized inventory, in which 75.4% of India inventory was held centrally in FY25, allows stores to serve largely as display and order-booking points. NexS coordinates made-to-order production and delivery, supporting next-day delivery across 78 India cities with 95%+ reliability, versus a traditional four-day delivery standard. Nomura identifies international operations as a second growth and margin engine. Lenskart had 734 international stores across 16 countries, with 718 active stores cited elsewhere in the report. The international business generated a 7.0% pre-Ind AS 116 EBITDA margin in FY26, versus 3.6-3.7% in FY25, and reached 10.6% in 1QFY27. Product margins are c.76% internationally versus c.63.5% in India, reflecting international ASPs of roughly three times India’s against average unit costs of only roughly twice India’s. Singapore and the UAE are described as established markets; Japan and Thailand are scaling through Owndays and localized execution; Saudi Arabia remains in investment mode. Nomura forecasts international revenue CAGR of 25.5% and volume CAGR of 21% over FY26-29F, while stressing that the India operating model must be adapted locally in product, pricing, format and marketing. Premiumization is the other major profitability lever. Progressive lenses address presbyopia among the 40+ population, where eyeglass coverage in India is only c.25%. These lenses command two to three times the ASP of single-vision lenses, while incremental manufacturing costs are modest because Lenskart already has centralized robotic processing. Premium progressive lenses contributed INR2.5bn of FY26 sales and progressive units grew 33% year-on-year in 1QFY27. The report also cites a broader premium mix shift: INR10k+ orders represented 20.5% of India revenue in FY26, up from 18.2% in FY25. Nomura expects the combination of international mix, progressive lenses and operating leverage to support a long-term steady-state pre-Ind AS EBITDA margin of 25%, versus 11% in FY26. Financially, Nomura forecasts revenue CAGR of c.26% and EBITDA CAGR of c.49% over FY26-29F, with normalized EPS rising from INR2.93 in FY26 to INR9.76 in FY29F. It expects India revenue CAGR of 26%, led mainly by 23% volume CAGR, and forecasts Lenskart’s organized-market volume share to rise from 30% in FY25 to c.46% in FY30F. Inventory days fell from 59 in FY25 to 43 in FY26, although the report expects some normalization upward as inventory is rebuilt. Its DCF uses a 6.75% risk-free rate, 5% risk premium, 0.95 beta, 11.5% WACC and 6% terminal growth rate, producing an INR888 target price. The target implies 42x Sep-28F EV/EBITDA; the stock traded at 34x Mar-28F EV/EBITDA in the report.

Analysis framework

Nomura combines a bottom-up assessment of India’s store whitespace and unit economics with an industry supply-demand analysis of eyeglass penetration, refractive-error incidence and organized-retail formalization. It then evaluates operating moats—remote optometry, automation, centralized supply chain, GeolQ site selection and omnichannel fulfilment—before modelling domestic and international revenue, margin and cash-flow progression. Valuation is based on a DCF framework, supplemented by domestic and global peer comparisons.

Methodology notes

• Industry AnalysisSupply-demand framework

  Eyewear demand is assessed through refractive-error prevalence, prescription-eyeglass penetration, retail density and organized-channel share.

  The report uses unmet vision-correction needs and limited access to explain why the addressable market can expand, rather than treating growth only as share transfer among existing buyers.

• Industry AnalysisUpstream-Midstream-Downstream Transmission

  Vertically integrated manufacturing, centralized inventory and retail distribution.

  Nomura explains that controlling manufacturing through retail reduces intermediaries, lowers costs, improves quality and speeds fulfilment, supporting Lenskart’s value proposition.

• Corporate Fundamentals and FinanceOperating and Financial Leverage Analysis

  Margin expansion through scale, international mix, premium lenses and declining marketing intensity.

  The report links higher volumes and better mix to a lower incremental-cost base and a higher long-term EBITDA margin.

• Valuation methodsDCF (Discounted Cash Flow)

  Discounted cash flow valuation.

  Nomura discounts forecast free cash flows using an 11.5% WACC and a 6% terminal growth rate to derive the INR888 target price.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Lenskart Solutions (LENSKART IN)

  Primary covered company; Nomura views it as a structural beneficiary of India’s underpenetrated eyewear market and the shift toward organized retail.

  Strengths

  Integrated manufacturing, remote optometry, GeolQ-led expansion, omnichannel fulfilment, broad product architecture and international platform.

  Weaknesses

  Tier 2+ expansion is not yet a fully proven template because of logistics, hiring and optometry constraints.

  Comparison

  The report cites product margins of c.76% internationally versus c.63.5% in India and compares Lenskart with domestic and global eyewear peers.

  Risks

  Lower volume growth or revenue per store, rising competition, slower store expansion, weaker margin improvement and slower international execution.

Key data

• Target priceINR888Buy initiation; implies +39.6% upside from INR636 on 28 August 2026.
• Revenue CAGRc.26%Nomura forecast for FY26-29F.
• EBITDA CAGRc.49%Nomura forecast for FY26-29F.
• India eyewear market growth13% CAGRRedseer projection from INR788bn in FY25 to INR1,483bn in FY30E.
• India prescription-eyeglass penetration35%Versus 69% in Japan and 88% in the US.
• India store network2,725 storesAcross 600+ cities; 604 net new stores added in FY26.
• International product marginc.76%Versus c.63.5% in India in FY26.
• Long-term pre-Ind AS EBITDA margin25%Management target cited by Nomura, versus 11% in FY26.
• DCF assumptions6.75% risk-free rate; 5% risk premium; 0.95 beta; 11.5% WACC; 6% terminal growthInputs used for Nomura’s INR888 target price.

Impact & implications

The report’s investment case depends on Lenskart translating low Indian eyewear penetration into durable volume growth while retaining the cost, service and quality advantages of vertical integration. Nomura expects international mix, progressive lenses and operating leverage to make future growth increasingly profitable.

Risks

• Volume growth or revenue per store could be lower than expected.
• Competitive intensity could increase significantly.
• Store expansion could be slower than expected.
• Margin improvement could be lower than expected.
• International scaling could face slower-than-expected execution.

What to watch

• Store additions and payback performance, particularly in Tier 2+ cities.
• Same-pincode sales growth relative to same-store sales growth as evidence of demand creation versus cannibalization.
• Remote-optometry deployment and AI self-eye-test progress.
• International revenue growth, store expansion and pre-Ind AS EBITDA margins.
• Adoption and growth of progressive lenses and other premium products.
• Progress toward the long-term 25% pre-Ind AS EBITDA margin target.