International Gemmological Institute Gets 'Buy' Rating As Investec Initiates Coverage
IGI ranks among the top two diamond certification firms globally and is a leader in lab-grown diamond certification, the brokerage noted.
Investec has initiated coverage on International Gemmological Institute (India) Ltd., assigning a 'buy' rating and setting a target price of Rs 489 per share. This decision comes as IGI continues to demonstrate strong growth and resilience in the diamond certification industry.
"IGI ranks among the top two diamond certification firms globally and is a leader in lab-grown diamond certification," the brokerage noted.
The firm is expected to benefit significantly from the rising adoption of lab-grown diamonds worldwide and the fast-growing Indian natural diamond market, according to the brokerage.
The global market for lab-grown diamond volumes is projected to grow at a 15% compound annual growth rate from 2023 to 2028, according to Redseer. IGI is well-positioned to achieve a 14.3% revenue CAGR till 2027, it said.
"IGI boasts industry-leading consolidated Ebitda margins of over 57% and a return on capital employed profile of approximately 38%, following acquisitions in Belgium and the Netherlands," Investec said.
Despite declining diamond prices, IGI India delivered a 37% earnings CAGR from 2021 to 2024. With natural diamond prices stabilising and lab-grown diamond wholesale prices nearing production costs, significant declines in certificate realisations are unlikely, the brokerage noted.
Investec has raised its earnings per share estimates for IGI by 7% for both FY26 and FY27, driven by higher margin assumptions. The brokerage expects IGI to deliver a 15% EPS CAGR and a 27% return on equity over FY25–28, supported by a robust domestic order book, emerging export opportunities, and strong government support for defence manufacturing.
Risks to IGI's model are overstated and significant disruption is unlikely, according to Investec. As lab-grown diamonds gain traction in non-US markets and US retailers rely on certificates to enhance the prestige of lab-grown products, IGI is expected to remain a key player in the diamond jewellery value chain globally.
