> ## Content Index > Fetch the complete content index at: https://www.moatmarginresearch.com/llms.txt > Use this file to discover other available public pages before exploring further. # Lenskart's September Quarter: Product Margin Held at 70.0% as In-House Frame Manufacturing Rose 71.7% - URL: https://www.moatmarginresearch.com/lenskart-q2-in-house-manufacturing-product-margin/ - Published: 2026-11-05T07:01:50.000Z - Updated: 2026-11-05T07:01:50.000Z - Description: Lenskart's Q2 FY27 product margin held at 70.0% despite a weaker rupee as in-house frame manufacturing grew 71.7%. What the filings show, and what is proforma. - Author: A K Karthikeyan - Tags: Moat Insights **Lenskart Solutions Limited reported consolidated revenue from operations of ₹2,845.03 crore for July-September 2026 and a profit after tax of ₹232.45 crore (\[BO\], p.13). The company's headline compares these with proforma year-ago figures of ₹2,147 crore and ₹113 crore (revenue +32.5%); against the reviewed statutory figures of ₹2,096.14 crore and ₹103.45 crore, revenue grew 35.7% (our arithmetic). Product margin, which the company defines as revenue less raw materials, purchases of traded goods and the inventory change, was 70.0% against 69.2% proforma, and the company says it held "despite continued INR depreciation against the RMB" while in-house frame manufacturing grew 71.7% and lens manufacturing 52.2% (\[SL\], \[PR\]). That 0.8-point gain accounts for about 0.8 points of the 2.7-point rise in EBITDA (pre-IndAS 116) margin, to 13.8% from 11.1% proforma (our arithmetic); the company points to lower employee, marketing and rent shares in India for the rest. The filings give no in-house share and no size for the currency hit.** ## The idea in one sentence If a company makes its own frames and lenses, a weaker rupee against the yuan should cost it less than it costs a company that buys them; Lenskart's quarter fits that, but the filings show a margin held, not a margin widened by manufacturing. ## The fact that breaks the assumption The tempting story is that factories lifted the margin. The company's own text is more careful. In the India segment, where product margin was 64.0% against 63.4%, it says: "In this quarter, most of the product-margin improvement we earned was consumed by currency headwinds." (\[SL\], FAQ 2). The founders' letter, signed by Peyush Bansal (Chairman, Managing Director and Chief Executive Officer, per \[PR\]), says: "Our teams answered with 72% more frames and 52% more lenses from our own plants; that absorbed the currency" (\[SL\]). That is the company's causal claim, and its own. The press release puts it as in-house manufacturing "helping offset currency pressures and strengthen control over product quality and costs" (\[PR\]). Read plainly, the manufacturing push is described as an offset. The currency cost is not quantified anywhere in the three documents. ## One concrete thing, followed: the 70.0% Product margin is not a number the company asks us to take on trust; the glossary defines it as "Revenue from operations (-) cost of raw material and components consumed (-) purchase of stock in trade (-) changes in inventory of traded and finished goods" (\[SL\], glossary). From the consolidated statement (\[BO\], p.13), for Q2 FY27: - Revenue ₹2,845.03 crore, raw materials and components ₹720.48 crore, purchases of stock-in-trade ₹201.95 crore, and a change in inventories of minus ₹68.48 crore (an inventory build, which lowers cost). That leaves ₹1,991.08 crore, or 69.98% of revenue (our arithmetic): the company's 70.0% recomputes. - The year-ago column. On the proforma annexure (\[BO\], p.19) the same arithmetic gives 69.18%, matching the printed 69.2%. On the reviewed statutory column (\[BO\], p.13) it gives 68.98%, or 69.0% (our arithmetic). So the like-for-like gain is 0.8 points on the company's proforma basis and 1.0 point on the statutory basis; the difference is the added Meller and Quantduo months. - The June quarter. Using the same statement, the product margin for April-June 2026 works out to 70.3% (our arithmetic: revenue ₹2,714.18 crore, raw materials ₹631.18 crore, purchases ₹168.64 crore, inventory change +₹7.43 crore), so on this arithmetic the margin slipped about 0.3 points from the previous quarter. The documents we read do not print a June-quarter product margin to compare. By segment, the company gives India 64.0% against 63.4% and International 77.1% against 75.5%, year-ago figures on its proforma basis (\[SL\], key insights). The two segments tell different stories on cause. For India the letter credits "increased in-house manufacturing of frames and lenses, and centralised manufacturing" with helping sustain the margin. For International it says the margin was "unchanged from Q1, benefiting from the continued integration of Meller and Owndays into our supply chain and from a structurally higher margin sunglasses mix" (\[SL\], FAQ 4). The International gain, the larger of the two, is attributed by the company to acquired brands and sunglasses mix, its International explanation does not mention frame and lens plants. ## The mechanism: what "factory to face" says it does The letter's section "Factory to Face: The Path to 25%" is the company's description of the mechanism. It lists seven stages Lenskart says it owns, from brand to retail and its own software, and says "each of the seven is also a pool of profit" (\[SL\]). Three are relevant to a cost advantage: - **Frames.** The letter names Baofeng Framekart in China since 2017, Manesar and Bhiwadi since 2021, and "a 50% joint venture with Sunrise in Thailand this year", and says "Every frame moulded in India no longer moves with the dollar" and that as volumes grow "the mould cost per piece keeps falling" (\[SL\]). Note 5 of \[BO\] records the Thai stake as a 50% interest in Marco Optical (Thailand) Co. Ltd., acquired for ₹7.08 crore on 1 April 2026 and accounted as a joint operation. - **Lenses.** "We make lenses where precision adds value: progressives, complex powers and premium coatings" (\[SL\]). The letter ties part of the 6.9% rise in India's average selling price to customers choosing premium lenses. - **Edging and fitting.** Done centrally and "largely by machine at \~75% automation"; "Scale is the biggest lever, because much of the cost here is fixed" (\[SL\]). The press release says the Bhiwadi facility uses robotic production and AI-enabled quality checks (\[PR\]). Our reading: this is the shape of a scale cost advantage. Fixed cost in moulds, edging lines and plants is spread over more pairs, and a frame made in India has rupee costs. The growth figures fit the shape: in-house frame manufacturing +71.7% and lens +52.2% against eyewear units +27.1% (India +26.5%, International +29.7%, \[SL\]). If output and units were comparable, in-house supply would be growing much faster than sales. They may not be comparable: the documents do not say what the 71.7% measures or what share of sales the plants supply. ## Where the 2.7 points of EBITDA margin came from EBITDA (pre-IndAS 116), the company's own measure, was ₹392 crore against a proforma ₹237 crore (the company prints +65.0%), a margin of 13.8% against 11.1% (\[PR\], \[SL\]). The statutory EBITDA of ₹624 crore recomputes from the statement as profit before tax ₹304.48 crore plus finance costs ₹53.15 crore plus depreciation ₹320.62 crore less other income ₹54.46 crore, or ₹623.79 crore (our arithmetic, \[BO\], p.13). Product margin accounts for about 0.8 of the 2.7 points (our arithmetic, on the proforma comparison). The company points elsewhere for the rest, and the India figures it gives (year-ago on the company's proforma basis) are: - Employee cost 18.0% of India revenue against 19.3%: "Our older stores and corporate functions continued to deliver leverage" (\[SL\], FAQ 2). - Marketing 4.5% against 5.4%: "part of this is efficiency and part of this is timing" (\[SL\]). The letter adds that the company would like to spend more. - Rent 5.7% against 6.1%, "contributing 40 basis points of operating leverage", with same-store sales growth of 20.8% against annual rent escalations of about 5% (\[SL\]). - Other expenses excluding marketing rose to 19.9% from 19.1%, which the company ties to technology spend and logistics (\[SL\]). For the group, employee benefits expense was 22.0% of revenue against 23.6% proforma (our arithmetic from \[BO\], pp.13 and 19). So the consolidated margin story is mostly store and corporate leverage plus a product margin that did not fall. ## BEAR CASE: where this breaks - **The manufacturing evidence is the company's description, not a measurement.** No in-house share, no cost per pair, no currency hit. A product margin that holds can also reflect pricing and mix: the company says India's average selling price rose 6.9% on premium lenses and progressives (\[SL\], FAQ 1), and our reading is that price and mix may explain part of the 70.0%. The documents do not separate the two. - **"Own plants" includes entities that were not consolidated all quarter.** Baofeng Framekart is on the letter's list of frame plants. Note 6 of \[BO\] says that after 30 September a further 19% was bought for ₹10.83 crore, taking the group to 70%, and that Baofeng "has become a subsidiary". Our reading, from 70% less 19% (our arithmetic): during the quarter it was held at 51% and was not yet a consolidated subsidiary, so the cost savings may sit partly outside the consolidated cost lines; the filings do not say whether its output is in the 71.7%. - **The China-made frames still sit in yuan.** The letter's own risk line says "Currency, until more pairs are made in India", and its India point says the benefit applies to frames "moulded in India". Our reading: frames and lenses made in China would still be priced in a currency that has moved against the rupee, which fits the company saying the currency took most of the India improvement. - **The margin was a little lower than in the June quarter.** On our arithmetic 70.3% in April-June 2026 against 70.0% now. One sequential step proves little; it does show the year-on-year hold is not a steady climb. - **Hyderabad will carry cost before it carries volume.** The letter lists "Hyderabad, which carries fixed cost before volume" among what could slow margins. The plant is "built for 50 million pairs a year" and "around twelve months away" (\[SL\]). Plant and other capex was ₹297 crore in the half, "led by Hyderabad" (\[SL\]). The company says operating cash flow of ₹388 crore covered the ₹187 crore of store capex and still left a net cash inflow of ₹12 crore before acquisitions (\[SL\], \[PR\]). - **Inventory is up.** The balance sheet shows inventories of ₹1,487.73 crore at 30 September against ₹1,037.00 crore at 31 March (\[BO\], p.14), up about 43% (our arithmetic). The letter calls it "inventory coming back to the normalised levels and rebuilt ahead of the festive season", with a ₹238 crore working-capital build in the half. A larger own-manufactured inventory is also a bigger bet on demand. - **Review, not audit; proforma is unreviewed.** S.R. Batliboi & Associates LLP concluded "nothing has come to our attention" on the consolidated statements, relying on other auditors for 14 subsidiaries with revenues of ₹1,231.27 crore for the quarter (\[BO\], pp.8-9) and noting that results of some other entities were not reviewed, which management told the auditor are "not material to the Group" (\[BO\], p.10). The year-ago comparison in the headline is the part nobody has reviewed. - **Strongest case against our reading.** The company's case is that ownership of the frame, the lens, the fitting and the store lets it improve cost at each stage, and that it deliberately does not optimise for margin: "we will not put a timeframe on 25%" and "We read margins over years, not quarters" (\[SL\]). If so, a flat-to-slightly-up product margin through a currency move is exactly what a cost advantage looks like, and the proof will come when more pairs are made in India. We cannot test that from one quarter. ## Why it costs the reader something A reader who sees "70.0%, in-house frames +71.7%" and concludes that factories are driving Lenskart's margin gain is working with a cause the company itself describes as an offset: the India segment says currency took most of its product-margin improvement, and the larger segment gain abroad is credited to acquired brands and sunglasses mix. Only 0.8 of the 2.7 points of EBITDA margin gain is product margin (our arithmetic); the rest is operating leverage in stores and corporate costs, which comes from sales growth. Our reading: that makes the margin depend on same-store growth continuing, and the moat claim on manufacturing depends on numbers the company has not published. ## The concrete thing, again Product margin recomputes to 70.0% from the consolidated statement, against 69.2% proforma and 69.0% statutory a year ago, in a quarter when the rupee moved against the yuan. What the filings do not say is how much of Lenskart's own frames and lenses come from its own plants, how large the currency cost was, or how much of the 0.8 points is manufacturing rather than mix. The quarter shows a margin that held; it does not yet show a cost advantage that competitors lack. ## Sources - **\[BO\]** [Lenskart Solutions, outcome of board meeting of 4 Nov 2026: results, review reports and proforma annexure](https://nsearchives.nseindia.com/corporate/LENSKART%5F04112026153338%5FOutcome%5FIntimation%5F-%5FBM%5Fdated%5F04112026.pdf) (NSE) - **\[SL\]** [Lenskart Solutions, Shareholders' Letter, 4 Nov 2026](https://nsearchives.nseindia.com/corporate/LENSKART%5F04112026154204%5FReg30%5F-%5FShareholders%5FLetter%5F-%5FSE%5FIntimation.pdf) (NSE) - **\[PR\]** [Lenskart Solutions, press release on the Q2 and H1 FY27 results](https://nsearchives.nseindia.com/corporate/LENSKART%5F04112026161516%5FPress%5FRelease%5FIntimation%5Fdated%5F04112026.pdf) (NSE) - Earlier Moat & Margin pieces: [Laurus Labs, Q2 mix, operating leverage and margin](https://www.moatmarginresearch.com/laurus-labs-q2-cdmo-mix-margin/); [daily filing digest, 4 November](https://www.moatmarginresearch.com/daily-filing-digest-2026-11-04/) --- > Educational research, not investment advice. Every figure above is drawn from Lenskart Solutions Limited's own filings of 4 November 2026 (board outcome with results and review reports, shareholders' letter, press release), read from the primary documents on 5 November 2026; the year-ago comparison in the company's headline is proforma and unreviewed, as stated in the text; derived figures are our arithmetic, labelled as such. MoatSCORE: 5.51 (AMBER, first-pass), read live from the Moat Screener on 5 Nov 2026\. No buy/sell recommendations, no price targets, no share prices. Moat & Margin is not a SEBI-registered Research Analyst or Investment Adviser.