Lab-Grown Diamonds To Drive Growth As Vaibhav Global Navigates Tariff Uncertainty, Says CFO

The rising affordability of lab-grown diamonds compared to natural ones has fuelled a surge in demand, according to Nitin Panwad, Group CFO of Vaibhav Global Ltd.

Speaking to NDTV Profit, the top executive highlighted the company’s diversified sourcing strategy across multiple countries is driving higher gross margins in this segment.

“In the past nine to twelve months, demand for lab-grown diamonds has increased significantly. They are more affordable than natural diamonds, often priced at one-tenth or even lower. The two key advantages we have are strong customer demand and high velocity of sales on air and social media," Panwad said.

"Besides, we benefit from higher gross margins due to our diversified sourcing. We have also observed lower sales return rates for lab-grown products. We believe the share of lab-grown products will reach double digits in the near term,” he added.

Panwad addressed concerns over potential tariffs announced by US President Donald Trump, stating that Vaibhav Global’s widespread sourcing network puts it in a strong position to mitigate risks.

“We source from 30 countries globally, which places us in a much better position to diversify our risk and mitigate tariff impacts if they are implemented on April 2. While there will certainly be an effect, our lower cost of goods sold compared to other retailers gives us an advantage,” he said.

However, he acknowledged that global geopolitical uncertainties are affecting demand for Vaibhav Global’s products in the US and Europe.

“Consumer demand remains muted. With tariffs and multiple trade war concerns, customers are being cautious with discretionary spending. However, they are still investing in high-value items like gold. Demand remains particularly weak in Europe and the UK, where the cost-of-living crisis continues to impact consumer sentiment. This is why we have trimmed our guidance for the upcoming quarters,” he said.

Since re-entering the German market in 2021, Vaibhav Global’s business there has been growing at a strong 30% rate. Panwad expects further gains in market share and profitability.

“Germany not only contributes to operating margins but also helps lower the company’s effective tax rate, thanks to high carry-forward losses. Once profits are generated, the effective tax rate will decline further,” he said.

Shares of Vaibhav Global closed 2.47% lower at Rs 217 on the NSE on Friday, as compared with 0.3% decline in the Nifty.