Want to invest in the future of diamonds? Don’t miss this IPO of a 65 per cent global market leader!

Between CY21 and CY23, the company achieved a CAGR of 32 per cent in revenue and 37 per cent in net profit, with an impressive CY23 RoE of 77 per cent and RoCE of 81 per cent.

About the issue  

International Gemmological Institute (India) Ltd is preparing to launch its Initial Public Offering (IPO) for equity shares. See the issue details below.

Objects of the Issue  

The offer encompasses both the fresh issue and the offer for sale. It's important to note that the company will not accrue any proceeds from the offer for sale. The company plans to allocate the net proceeds raised from the fresh issue for the following purposes:

1. Payment of the purchase consideration for the acquisition of IGI Belgium Group and IGI Netherlands Group from the promoter

2. General corporate purposes.

Promoter holding

BCP Asia II TopCo Pte. Ltd is the promoter of the company. The promoters and promoter group currently hold a pre-issue shareholding stake of 100 per cent in the company.

Company profile  

According to the Redseer Report, International Gemmological Institute (IGI) ranks as the world’s second-largest independent provider of certification and accreditation services by revenue for CY2023. Specializing in diamonds, studded jewellery, and coloured stones, IGI holds a global market share of approximately 33 per cent based on the total number of certifications performed during the year.

IGI offers a range of key services, including:

1. Comprehensive diamond grading.

2. Quality and authenticity evaluations for coloured stones.

3. Grading and assessment of finished jewellery pieces.

4. Educational programs and training courses.

Further solidifying its position, IGI commands a leading 65 per cent market share globally based on the number of certifications in CY2023. By September 30, 2024, IGI India had established the largest laboratory network among global peers for grading lab-grown diamonds.

As of September 30, 2024, IGI served over 7,500 customers across 10 countries, including lab-grown diamond growers, natural diamond and coloured stone wholesalers, jewellery manufacturers, and retailers. The company has also built long-term relationships with several prominent brands and retailers.

Financials 

The company has consistently delivered robust growth in both revenue and profits over the past few years. Between CY21 and CY23, the company recorded a Compound Annual Growth Rate (CAGR) of around 32 per cent in revenue and 37 per cent in net profit.  

When annualized, the figures from the 9MCY24 indicate a 27 per cent revenue growth and a 34 per cent surge in net profit compared to CY23. The company delivered a robust return on equity (RoE) of 77 per cent and a return on capital employed (RoCE) of 81 per cent for CY23. The company has consistently paid dividends every year over the past few years.

Valuation & Outlook

The issue is priced with a P/BV ratio of 25.7 times, calculated using its Net Asset Value (NAV) of Rs 16.22 as of September 30, 2024. At the upper price cap, it is priced at a P/BV ratio of 8.51 times, considering its post-IPO NAV.

Considering the company's annualized CY24 earnings and fully diluted equity capital, the price-to-earnings (P/E) ratio stands at 38x.

The company stated that no listed companies in India have a business comparable to its own. Hence, a relative comparison is not feasible.

India dominates the diamond industry, commanding over 95 per cent of the global market share. Within this thriving sector, the company stands out as a leading and highly reputed certifier in the international market. 

Considering the rapid growth of the laboratory-grown diamond industry, coupled with the company’s established market position, robust financial track record, and consistent dividend payouts, we recommend investors subscribe to this issue with a long-term investment horizon.