Step-by-Step Process for IPO Analysis
1. Business Model & Market Positioning: Identify the "moat" (competitive advantage). Is the company a cost leader (like
Meesho) or vertically integrated (like Lenskart)? (In the world of business and investing, an "Economic Moat" is a company's sustainable,
long-term competitive advantage that allows it to protect its market share and profitability from rivals.)
2. Financial Health (Three-Year Trend): Look for consistent revenue growth and the trajectory of profitability. Analyze the
"Bottom Line" (PAT) and "Core Performance" (EBITDA).
3. Key Operational Metrics (Unit Economics): For e-commerce, analyze Average Order Value (AOV) and Contribution
Margin. For retail, look at Same Store Sales Growth (SSSG) and Revenue per Square Foot.
4. Objects of the Offer: Determine if the "Fresh Issue" money is for "Growth" (expansion, tech) or "Debt Repayment." A
growth-oriented use of funds is generally preferred.
5. Valuation & Peer Comparison: Compare the Price-to-Earnings (P/E) or Price-to-Sales (P/S) ratios with listed competitors
(e.g., comparing Meesho to Zomato/Nykaa or Lenskart to Titan Eye Plus).
6. Promoter & Management Track Record: Evaluate the leadership's experience and the skin they have in the game (post-
IPO holding).
Comparative Analysis: Lenskart vs. Meesho
1. Business Model & Moat
• Lenskart: Operates an omnichannel vertically integrated model. It controls everything from lens manufacturing to retail,
allowing it to keep raw material costs 35-40% lower than the industry average. Its moat is its massive scale (over 2,800
stores) and high customer repeat rate (3.6 purchases every two years).
• Meesho: Operates an asset-light, zero-commission marketplace. It focuses on the "value-conscious" segment in Tier-2
and Tier-3 cities, where it holds a dominant 30% share of India's e-commerce shipments. Its moat is its "scarcity premium"
as the only pure-play value commerce platform going public.
2. Financial Performance (FY 2025)
Metric Lenskart (FY25) Meesho (FY25)
Total Revenue ₹7,009 Crore ₹9,901 Crore
Net Profit / Loss ₹297 Crore (Profit) -₹3,942 Crore (Reported Loss*)
Operational Health EBITDA Margin: 14.7% FCF Positive; Operational Loss only ₹108 Cr
Growth (CAGR) ~33.5% (2-year revenue) ~28.0% (Revenue growth)
*Meesho's massive FY25 loss was primarily due to one-time accounting/tax charges (₹2,487 Cr) related to corporate restructuring,
not operational failure.
3. Objects of the Offer
• Lenskart: Raising ₹2,150 crore in fresh issue mainly for setting up new company-owned stores (₹272 Cr), lease payments
(₹591 Cr), and tech infrastructure (₹213 Cr).
• Meesho: Raising ₹4,250 crore in fresh issue to invest in technology, data science, and "Horizon 2" businesses like fintech
and content commerce.
4. Valuation
• Lenskart: P/E ratio is highly stretched at ~285x. This indicates that the market expects "near-perfect execution" for years
to come.
• Meesho: Valued at approximately 5.5x Price-to-Sales, which is considered attractive compared to peers like Zomato
(often >10x Sales).
Verdict: Which IPO is More Suitable?
The "suitable" choice depends on your investment thesis as an MBA student:
• Choose Lenskart if you prefer Stability & Profitability: It is a proven, profitable business with a clear physical moat.
However, the high valuation (285x P/E) leaves very little room for immediate listing gains, making it a "long-term hold"
only.
• Choose Meesho if you prefer Growth & Value-Valuation: Despite the headline loss, Meesho is Free Cash Flow (FCF)
positive and has better unit economics (₹8.09 contribution per order). At 5.5x Sales, it is priced more reasonably for a
high-growth tech platform and offers better potential for "scarcity premium" gains.
