International Gemmological Institute Share Price Locked In 10% Lower Circuit — Here's Why

International Gemological Institute (India) Ltd. share price fell to its lower limit of 10% after its December quarter earnings. The company posted a 6% rise in consolidated revenue for the three months to December 2024, disappointing the street. The muted revenue growth was led by high volumes in the lab-grown diamonds compared to natural segments. The company claimed that it does not see seasonality in its revenue and hence the muted revenue growth raises issues with respect to future growth.

Lab-grown diamonds gives the company lower revenue per carat compared to natural diamonds. A increase in lab-grown diamonds' certification improves volumes significantly for the company, but is accompanied by volume-led discounts, which impacts revenues.

The muted growth during the festive quarter also coincided with shutdown of natural diamonds manufacturing facilities across the country in November. These shutdowns lasted 15–20 days, twice than what was seen previous year, and was mainly to manage inventory, said the management during their analyst call. This is also corroborated by lower studded jewellery volumes seen by leading jewellers in the December quarter.

The quarter also saw share of lab-grown diamonds to revenue increase as adoption of this segment gains pace. The company declined to share the segmental revenue between natural diamond and lab grown diamonds. But it disclosed at the time of IPO that it charges $50 per carat for natural diamond certification and $20 per carat for lab grown diamond certification.

The company claims that prices of lab grown diamonds have stablised on the back of huge capex and operational expenses by the manufacturers.

The Indian-arm of IGI, which listed in December last year, acquired its sister concerns in Netherlands and Belgium from parent Blackstone, paying Rs 1,300 crore from the IPO proceeds for the consolidation.

While IGI Netherland BV has grown, the Belgium entity has been making losses due to the Russian-Ukraine war. IGI expects the Belgium arm to post profits once the war ends as it services the US market. The company has seen slowdown in revenue in the US and Belgium markets.

IGI Locked In Lower Circuit

The shares of International Gemological Institute fell as much as 10% to Rs 366.25 apiece to be locked in lower circuit on Monday. This is the lowest level since its listing in 2024. This compares to a 0.36% decline in the NSE Nifty 50 Index as of 11:00 a.m.

It has fallen 22.26% since its listing. Total traded volume so far in the day stood at three times its 30-day average. The relative strength index was at 28 indicating it was oversold.

The single analyst tracking the company maintains a 'buy' rating according to Bloomberg data. The average 12-month consensus price target implies an upside of 45.5%.