Lenskart Solutions Q1 FY27 earnings call

Lenskart Solutions Limited delivered a strong Q1 FY27, with consolidated revenue growing 34% year-on-year. Profit After Tax (PAT) saw a remarkable 182% increase, reaching ₹228 crores. This quarter also marked a significant milestone as the consolidated product margin surpassed 70% for the first time, up from around 69% in previous quarters. The company's operating cash flow stood at ₹297 crores, representing an 82% EBITDA to cash flow conversion, and Return on Capital Employed (ROCE) improved to 23% from 14% last year.

India revenue grew 30.7% year-on-year to ₹1,531 crores, with EBITDA pre-Ind AS 116 margin reaching 15.4%, a 2 percentage point increase from 13.3% last year, totaling ₹236 crores. The company added 116 net new stores and entered 50 new cities, expanding into 140 new towns this year. India same-store sales growth (SSSG) was 18.3%, and same pin code sales growth was 24%, demonstrating that densification continues to drive incremental demand rather than dividing it. Eye tests grew 42.7% to 63 lakhs, and eyewear units were up 22.8% to 82 lakhs, indicating strong volume-led growth.

International revenue grew 38% to ₹1,203 crores, or 29% on a constant currency basis. The international segment achieved an EBITDA pre-Ind AS 116 margin of 10.6%, a significant improvement from 4.5% last year, with total EBITDA reaching ₹127 crores, triple the previous year's figure. This growth was broad-based across all markets and brands, with eyewear units growing 37.6% and transacting customers up 27.8%. The product margin for international operations expanded to 77.1% due to deeper supply chain integration of Owndays and Meller.

Lenskart is actively building the market across the entire price spectrum. Premium offerings like Owndays lenses are generating over ₹1,500 crores in sales, and Rodenstock and Tokai eyeglasses (priced ₹30,000+) contribute roughly ₹250 crores annually. Simultaneously, the company successfully onboarded its largest-ever number of customers in 'real Bharat' through Hustir Club, offering ₹500 glasses with lenses and warranty. Management noted that the ₹500 price point is profitable at a unit economic level, and they underestimated the pace of customer premiumization.

The company is leveraging technology to scale eye care, with remote optometry now available in 786 stores, up from 168 stores at FY25 end. A significant development is the pilot launch of their self-AI eye test in stores, built on India's largest recorded eye test data sets. This AI-driven approach aims to address the shortage of optometrists and provide consistent, accurate eye tests. Additionally, the B by Lenskart initiative has seen over 80,000 sign-ups, with manufacturing scaling to ship hundreds of glasses daily.

Lenskart generated ₹297 crores in operating cash flow, which was sufficient to fund its store capex of ₹75 crores and plant capex of ₹132 crores, primarily for the Hyderabad facility. This resulted in a positive net cash inflow of ₹116 crores before M&A and equity raise. The company's Return on Capital Employed (ROCE) improved significantly from 14% last year to 23% this quarter, reflecting improved profitability and disciplined capital allocation.