In the competitive landscape of Indian e-commerce, Lenskart Solutions Ltd has revealed a formidable financial edge in its first quarterly results since listing. The eyewear giant's standout performance is anchored in its remarkably high gross margin, a metric where it significantly outpaces beauty retailer FSN E-Commerce Ventures Ltd (Nykaa). This fundamental strength is shaping investor optimism and the company's strategic roadmap for future growth.
The Gross Margin Advantage: A Deep Dive
For the September quarter (Q2FY26), Lenskart reported a consolidated gross margin of 69%. This figure, representing the difference between the value of goods sold and their cost, is substantially higher than the approximately 45% gross margin reported by Nykaa. Crucially, company management indicates this is not a one-off achievement but a sustainable position.
Breaking down the segments, Lenskart's India operations boast a gross margin of 63%, while its international segment performs even better at 76%. During the Q2 earnings call, the management suggested the gap between these two segments could narrow, as there is potential for the India margin to increase further.
Strategic Implications and Growth Levers
This high gross margin provides Lenskart with powerful strategic flexibility. The company can choose to retain this margin, which would allow its EBITDA and net profit to expand rapidly in the future due to operating leverage. Alternatively, it can strategically allocate a portion of this margin to fuel business growth through increased marketing spend or customer acquisition discounts.
Lenskart is already deploying such tactics, exemplified by its membership-based "buy-one-get-one-pair-free" offers. The strategy appears effective: a 20% year-on-year increase in sales volume in Q2FY26 drove a 24% growth in consolidated revenue to ₹2,147 crore. EBITDA surged 35% to ₹426 crore, with the margin standing at a healthy 19.8%. The management has expressed confidence in achieving a steady-state EBITDA margin of 25% in the long term, with store-level EBITDA margin in India already at an impressive 33%.
Market Opportunity and Sourcing Risks
The growth runway for Lenskart is substantial. According to Redseer Market Model, India's eyewear market is projected to expand from $9 billion in FY25 to $17 billion by FY30. Lenskart is estimated to have captured about a 10% market share in India, with expectations to sell around 25 million eyewear products in FY26. This is against an estimated annual industry sale of 266 million pairs. The opportunity remains vast, given that approximately 560 million people in India (assuming 40% of the population) need vision correction.
However, a significant risk looms over this optimistic outlook. More than half of Lenskart's raw material purchases in Q1FY26 were sourced from China, as per its draft IPO papers. This creates a vulnerability; a deterioration in India-China relations could disrupt the supply chain, as diversifying or localising raw material sourcing quickly is a major challenge.
From a valuation perspective, Lenskart appears relatively less risky than perceived. Even assuming a 20% CAGR growth in annualized FY26 revenue for the next two years and maintaining the current 20% EBITDA margin, the company trades at an EV/EBITDA of 32x for FY28 estimates, compared to 52x for Nykaa. The market has reacted positively to these fundamentals, with the stock rising nearly 4% in the two days following the Q2 results announcement on December 2, 2025.
