Lenskart shares rally over 10% as strong Q2 triggers target price hikes. What are Jefferies and Morgan Stanley saying?

Lenskart shares surged as much as 10.5% to Rs 763 on the NSE on Thursday after the eyewear retailer reported a 122.1% year-on-year (YoY) jump in consolidated profit to Rs 227.08 crore for the September quarter, compared with Rs 102.22 crore a year ago.

Revenue from operations rose 35.7% YoY to Rs 2,845.03 crore in the quarter under review, from Rs 2,096.14 crore reported in Q2FY26. The international segment grew 29.5% YoY to Rs 1,201 crore in Q2FY27, compared with Rs 928 crore in Q2FY26.

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Buy, sell or hold Lenskart shares?

Jefferies has raised its target price on Lenskart to Rs 780 per share, implying an upside potential of 16% from current levels. The brokerage remains positive on the company's growth trajectory, citing strong revenue expansion and significant scope for margin improvement.

Jefferies believes Lenskart is broadening its customer base through initiatives across different segments. Hustlr Club is aimed at tapping the next 100 million Indian consumers, while Evolv is focused on strengthening experiential retail. The entry into smart glasses also provides the company with an additional long-term growth opportunity.

Despite foreign exchange (FX) pressures, the brokerage said margin improvement remains on track. Lenskart has identified seven levers, supported by its end-to-end business ownership, to achieve its long-term adjusted EBITDA margin target of around 25%. However, the company has not specified a timeline for reaching this level, as growth remains its immediate priority.

Jefferies expects annual margin expansion to continue, although quarterly performance could remain volatile. The company has also retained its guidance for store additions in India.

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Foreign exchange movements remain a key headwind for gross margins, partly offset by in-house manufacturing and a natural hedge from revenues generated outside the rupee. Meanwhile, the increasing integration of artificial intelligence across customer service and operations is expected to support the business.

Jefferies believes Lenskart's strong growth prospects support its premium valuation, with the company's expanding business segments and multiple margin levers underpinning its longer-term growth story.

Morgan Stanley maintained its Overweight rating on Lenskart while raising its target price to Rs 805 from Rs 718, following the company's Q2 results, which came in ahead of the brokerage's estimates, and encouraging management commentary on growth and margins.

Morgan Stanley has raised its earnings per share (EPS) estimates by 22% for FY27, 29% for FY28 and 35% for FY29. While the improved earnings outlook is partly offset by lower valuation multiples for Indian peers, the brokerage expects consistent growth delivery to support higher valuations.

Motilal Oswal has reiterated its Buy rating on Lenskart and raised its target price to Rs 815, implying an upside potential of 18% from current market levels.

The brokerage believes Lenskart has established strong competitive advantages in an eyewear market that is difficult to scale. These include its centralised and automated manufacturing facilities and logistics network, backward integration that provides significant cost advantages, a large omnichannel presence, and the use of technology to overcome operational scaling constraints. Its house-of-brands strategy also supports its objective of making quality eyewear more accessible and affordable.

Motilal Oswal has fine-tuned its FY27-FY29 estimates and expects revenue, EBITDA and adjusted PAT to grow at CAGRs of 27%, 45% and 57%, respectively, over FY26-FY29. This growth is expected to be driven by revenue CAGRs of around 28% in India and 25% in international markets.

The brokerage also expects EBITDA margins to expand to around 19.3% in India and 13% in international markets by FY29. Its revised target price of Rs 815 is based on a 48x multiple of the blended December 2028 pre-Ind AS EBITDA..

Disclaimer: This article has been written by Veer Sharma, who is not a SEBI-registered Research Analyst or an Investment Adviser. Veer Sharma and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here