Lenskart Solutions' September-quarter (Q2FY27) performance would have been even stronger but for adverse currency movements. Investors, however, appear to be looking past these headwinds.
The stock hit an all-time high of ₹762.75 on Thursday, rising 6%. Consolidated revenue grew 32.5% year-on-year to ₹2,845 crore, while gross margin expanded 82 basis points to 69.98%. This was despite the Indian rupee depreciating about 16% year-on-year against the Chinese yuan, to an average of ₹14.2.
Currency remains a downside risk until Lenskart localizes more of its manufacturing, as a weaker rupee raises the cost of raw material imports from China. In Q2FY27, higher import costs significantly eroded the profitability gains from two key drivers: a sharp increase in in-house manufacturing of frames and lenses, which grew 71.7% and 52.2% year-on-year, respectively; and a 6.9% increase in average selling price in the India business.
Store productivity improved, with same-store sales growth (SSSG) in India at 20.8% year-on-year. International revenue grew 23% in constant currency, also largely driven by SSSG. Higher store productivity translated into operating leverage, helping Ebitda margin expand 274 basis points year-on-year to 13.8%.
This margin is calculated on a pre-Ind AS basis. Under Ind AS, lease costs are capitalized and depreciated over time rather than recognized upfront as regular expenses. Margins without applying Ind AS are therefore lower and offer a more conservative measure of profitability.