Strong Q1FY27 Earnings, International Growth and Improving Margins Drive Buying Interest; Equirus and Elara Raise Target Prices

Lenskart Solutions shares surged nearly 7 per cent to a fresh all-time high of ₹626.95 in Thursday's intraday trade after the eyewear retailer reported a strong performance for the June quarter. The sharp improvement in profitability, robust international growth and better operating margins prompted brokerages to raise their target prices on the stock.

The company reported a 182.3 per cent year-on-year jump in profit after tax (PAT) to ₹228 crore in Q1FY27, compared with ₹61 crore in the year-ago quarter.

The strong earnings performance came despite a volatile broader market. At around 10:01 AM, Lenskart was trading at ₹598, while the Nifty 50 was down around 0.36 per cent.

The stock touched an intraday high of ₹626.95, which also marked a new 52-week and all-time high.

Lenskart Q1FY27 Profit Jumps 182%

The most significant highlight of Lenskart's quarterly performance was the sharp increase in profitability.

The company's PAT rose 182.3 per cent to ₹228 crore, compared with ₹61 crore in Q1FY26.

The improvement reflects a combination of strong revenue growth, operating leverage, premiumisation and better margins.

The sharp rise in profit also indicates that Lenskart is increasingly converting its top-line growth into bottom-line expansion.

For investors, the key positive is that profitability is growing substantially faster than revenue, suggesting improving operating efficiency.

Revenue Rises Strongly in June Quarter

Lenskart reported revenue from operations of ₹2,714 crore in Q1FY27, up 33.6 per cent from ₹1,894 crore in the corresponding quarter last year.

The company continued to benefit from strong demand in both domestic and international markets.

The broad-based revenue growth is particularly important because it reduces Lenskart's dependence on a single geography and provides multiple growth avenues.

International operations have emerged as an increasingly important contributor to the company's overall growth.

EBITDA Rises 61%

Lenskart's EBITDA increased 61.3 per cent year-on-year to ₹589 crore during Q1FY27.

The faster growth in EBITDA compared with revenue indicates improving operating leverage.

Margin expansion has become an important part of the Lenskart investment story, particularly as the company expands its manufacturing capabilities and increases the contribution of premium products.

The company is therefore moving beyond a pure store-expansion growth model towards a combination of volume growth, premiumisation, manufacturing integration and operating efficiency.

Strong Cash Generation Supports Expansion

Another major positive from the quarter was Lenskart's cash-generation performance.

The company generated around ₹1,297 crore of operating cash flow, substantially higher than capital expenditure of approximately ₹207 crore.

Strong operating cash flow provides Lenskart with greater financial flexibility to fund store expansion, manufacturing capacity, technology investments and international growth.

The gap between operating cash flow and capital expenditure also highlights the company's ability to generate internal resources while continuing to expand.

International Business Emerges as Major Growth Driver

Lenskart's international operations remained one of the strongest parts of the business during Q1FY27.

According to Equirus Research, the international business delivered approximately 38 per cent year-on-year growth, while India recorded around 31 per cent growth.

International constant-currency growth stood at approximately 29 per cent, indicating that the underlying demand environment remained strong despite currency-related headwinds.

The international business could become increasingly important as Lenskart expands its presence across markets outside India.

India Business Maintains Strong Momentum

The domestic business also delivered healthy growth.

Equirus highlighted approximately 31 per cent year-on-year growth in India, supported by strong same-store sales growth.

India posted around 18 per cent same-store sales growth, suggesting that existing stores are continuing to generate strong customer demand.

This is an important indicator because it demonstrates that Lenskart's growth is not solely dependent on opening new stores.

Higher sales from existing outlets can improve store economics and operating leverage.

Eye Testing Volumes Increase Sharply

The company's eye-testing ecosystem also continued to expand.

Elara Securities highlighted that eye tests increased 39.8 per cent year-on-year to 7.1 million during Q1FY27.

The increase in eye-testing volumes is strategically important because it supports Lenskart's integrated retail model.

Eye testing can serve as an important customer acquisition channel and increase the likelihood of prescription eyewear purchases.

The strong growth in testing volumes therefore provides another indicator of increasing customer engagement.

Premiumisation Supports Gross Margin

One of the key operational improvements highlighted by analysts was the expansion in gross margin.

Equirus said Lenskart's gross margin improved by around 65 basis points sequentially, driven by premiumisation and greater use of in-house manufacturing.

Premium products typically carry higher margins and can improve profitability even without proportionate increases in sales volumes.

Lenskart's ability to move customers towards higher-value products could therefore become a structural driver of margin expansion.

In-House Manufacturing Could Improve Profitability

Increasing manufacturing integration is another important component of Lenskart's long-term strategy.

Greater in-house manufacturing can provide the company with better control over product design, quality, inventory and cost.

It can also potentially reduce dependence on external suppliers and improve gross margins over time.

As the company's scale increases, manufacturing integration could become increasingly valuable.

International Margins Show Strong Improvement

Equirus highlighted a significant improvement in international margins during the quarter.

The brokerage noted that pre-Ind AS EBITDA margin improved by around 50 basis points sequentially, supported by a sharp 130-basis-point improvement in the international business.

India margins remained broadly stable sequentially, although higher employee costs offset some of the benefits from operational improvements.

The improvement in international profitability is particularly encouraging because it suggests that overseas expansion can potentially become earnings accretive rather than simply adding revenue.

Equirus Raises Target Price to ₹698

Equirus Research maintained its 'Long' rating on Lenskart and raised its September 2027 target price to ₹698 from ₹662.

The brokerage described the quarter as another strong performance, highlighting broad-based growth across India and international operations.

Equirus expects the company's structural growth drivers to remain intact, including:

• Rising incidence of refractive errors

• Low eyewear penetration

• Limited scaled competition

• Strong revenue growth

• Greater in-house manufacturing

• Premiumisation

• Improving margins

These factors could support continued earnings growth over the medium term.

Elara Maintains Buy, Raises Target to ₹690

Elara Securities also maintained its 'Buy' rating on Lenskart and increased its target price to ₹690 from ₹615.

The brokerage highlighted the company's stronger-than-expected Q1 performance, particularly international growth and rising eyewear volumes.

Elara expects stronger international performance to support further margin expansion.

The brokerage is valuing Lenskart at around 50 times March 2028 estimated EV/pre-Ind AS EBITDA, reflecting the premium valuation assigned to the company's growth prospects.

Why Analysts Remain Bullish

The positive brokerage commentary is based on several structural characteristics of Lenskart's business.

Low Eyewear Penetration

India's eyewear market remains relatively underpenetrated, creating a large addressable opportunity.

Rising Refractive Errors

Increasing screen exposure, changing lifestyles and greater awareness of eye health are supporting demand for corrective eyewear.

Organised Market Opportunity

The fragmented nature of India's eyewear market provides opportunities for organised players with strong brands and distribution networks.

Premiumisation

Customers are increasingly willing to spend more on branded and higher-quality eyewear, supporting average selling prices and margins.

International Expansion

Growth outside India provides an additional long-term revenue opportunity.

MSCI Index Inclusion Could Improve Visibility

Lenskart is also set to be included in the MSCI India Domestic Index from the close of August 31, 2026.

Index inclusion can increase visibility among institutional investors and may create incremental demand from funds that track or benchmark against the index.

While index inclusion itself does not change a company's fundamentals, it can potentially improve liquidity and broaden the investor base.

Investors should nevertheless focus primarily on earnings growth and valuation rather than treating index inclusion as a standalone investment thesis.

Store Expansion Remains a Key Growth Lever

Lenskart's physical retail network remains central to its growth strategy.

The company combines physical stores with digital channels, eye testing and technology-enabled customer engagement.

A larger store network allows Lenskart to reach new customers while increasing brand visibility and creating additional opportunities for repeat purchases.

However, the key monitorable will be whether new stores achieve attractive sales productivity and returns on capital.

Technology and Omnichannel Model Strengthen Competitive Position

Lenskart's competitive advantage also comes from its combination of technology, physical retail and digital distribution.

Customers can discover products online, visit stores for eye testing and fitting, and access a broad range of products across channels.

The integration of these channels can improve customer acquisition and retention while allowing the company to collect valuable customer data.

Over time, the omnichannel model could help Lenskart maintain an advantage over fragmented offline competitors.

Key Risks Investors Should Watch

Despite the strong Q1 performance and bullish brokerage views, the stock carries several risks.

High valuation: The sharp rally and premium valuation leave less room for earnings disappointments.

Execution risk: Rapid store and international expansion requires disciplined capital allocation.

Competition: New organised and online eyewear players could increase competitive intensity.

Currency volatility: International growth exposes the company to foreign exchange fluctuations.

Employee costs: Rising staff expenses could offset some operating leverage.

Consumer spending: Premium eyewear demand can be sensitive to changes in discretionary spending.

Manufacturing execution: The benefits of in-house manufacturing depend on efficient capacity utilisation and quality control.

Lenskart Brokerage Target Prices

Both brokerages have raised their target prices following the Q1 performance, reflecting increased confidence in Lenskart's earnings trajectory.

What Investors Should Watch Next

The next few quarters will determine whether Lenskart can sustain its current growth trajectory.

Investors should monitor India same-store sales growth, international revenue growth, gross margins, pre-Ind AS EBITDA margins, eye-testing volumes, store productivity, operating cash flow and manufacturing integration.

The sustainability of international growth will be particularly important because it is becoming an increasingly significant contributor to the company's overall performance.

Valuation Becomes an Important Monitorable

Lenskart's strong business performance has also resulted in increasing investor expectations.

The stock's move to a fresh high means that future earnings growth will need to remain strong to justify the premium valuation.

A company can continue to deliver excellent operating performance while its stock still experience volatility if expectations become excessively high.

Therefore, investors should compare the stock's valuation with its expected earnings and cash-flow growth rather than focusing only on the recent share-price momentum.

Market Outlook

Lenskart's Q1FY27 performance has strengthened the bullish case for the company, with PAT rising 182.3 per cent, revenue increasing 33.6 per cent and EBITDA growing 61.3 per cent year-on-year.

The combination of strong India growth, robust international performance, premiumisation, rising eye-testing volumes and greater in-house manufacturing provides multiple avenues for continued earnings expansion.

The positive brokerage response is also significant. Equirus raised its target to ₹698, while Elara increased its target to ₹690, with both maintaining constructive ratings.

However, after the stock touched a fresh high of ₹626.95, valuation and expectations become increasingly important. The key test for Lenskart will be whether it can sustain strong growth while continuing to expand margins and generate healthy cash flows.

Over the medium term, international growth, same-store sales, manufacturing integration, margin expansion, store productivity and index inclusion-related institutional interest will remain the key factors to watch for the stock.