International Gemological Institute (India) Ltd (May Apply)  

Highlights

International Gemological Institute (India) Limited (IGIIL) incorporated on 1999, and their primary business is the provision of services related to the certification and accreditation of natural diamonds, laboratory-grown diamonds, studded jewelry and colored stones as well as the offering of educational programs.  

The IGIIL is part of the International Gemological Institute (IGI) group, and is responsible for the operation of the business under the IGI brand exclusively in India and Türkiye. IGI is one of the established reputed certifiers in the global markets.  

IIGL offers key services like (i) Comprehensive diamond grading (ii) Evaluating the quality and authenticity of colored stones (iii) Grading and assessment of finished jewelry pieces (iv) Conducting educational programs and courses in gemology, diamond grading, jewelry design, and related subjects for professionals and enthusiasts in the diamonds, studded jewelry and colored stones industry.

IGI India was the first to provide certification and accreditation services among our global peers in 1999 and was the first international laboratory for diamonds, studded jewelry and colored stones certification to be established. Out of the total proceeds of Rs. 42,250 mn, Rs. 13,000 mn would go towards payment of the purchase consideration for the acquisition of the IGI Belgium Group and IGI Netherlands Group from the Promoter. Rs. 1,750 mn would go towards general corporate purpose and Rs. 27,500 mn would go towards existing selling shareholders of the company.

Key Highlights

• The global jewelry market, which includes studded jewelry, is expected to grow at a CAGR of 3 pct to 6 pct from CY23 to CY28, and global diamond consumption is expected to grow at a CAGR of 6 pct over the same period. As the studded jewelry market grows, demand for certification is likely to rise, and certifications of diamonds, studded jewelry and colored stones is expected to grow at a CAGR of 5 pct to 10 pct from CY23 to CY28, with laboratory-grown diamonds certification leading the certification growth by volume.
• The company possess extensive industry knowledge and experience which has supported our efforts to anticipate developments and pioneer initiatives to participate in the fast-changing industry landscape. Since the founding of the business in 1975, IGI has advanced various technical and industry practices in the diamond, studded jewelry and colored stone certification segment.
• IGI was the first among global peers to issue certification reports for laboratory-grown diamonds globally in CY05, and through their customer-centric approach and commitment to innovation, IGI has become the global leader with ~65 pct of the market share based on the number of certifications of laboratory-grown diamonds for CY23.
• As the company aim for their education business to serve as the precursor of their certification business, they also offer education solutions to customers through IGI Schools of Gemology to train their employees. They also offer marketing support to certain customers and partners including during the development of co-branded reports.
• The company is a portfolio company of Blackstone and they benefit from the resources, relationships and expertise of Blackstone which has also helped them create a robust, structural governance framework.
• IGIIL’s key strategy includes (i) Maintain leadership position in certification of laboratory-grown diamonds (ii) Expand presence in the natural diamond and studded jewelry and colored stone vertical (iii) Expand global laboratory network (iv) Continue to invest in building brand salience (v) Leverage strength in education to increase awareness as well as build trust and transparency (vi) Continue to invest in technology including AI to improve processes.
• Sales of the company has grown by 32.32 pct CAGR over CY21-23 to Rs. 6,385 mn While EBITDA and profit grew 36.77 pct and 37.60 pct CAGR over same year. EBITDA rose by 34.29 pct YoY to Rs. 4,501 mn with 70.49 pct margin in CY23. Additionally, the company posted profit of Rs. 3,247 mn in CY23, which grew 34.32 pct YoY. In 9MCY24 the sales/EBITDA/profit grew 31.4 pct YoY/33.57 pct YoY/36.6 pct YoY.

Key Risks

• They do not have long term contracts with customers, and there is no assurance that they will continue to demand for their services which can affect their business.
• The Promoter has acquired the Company in Calendar Year 2023 and does not have significant experience in this line of business.
• The company do not have a formal business succession policy, and any failure to develop or implement an adequate succession plan may adversely affect the long-term success of business.

Valuation

International Gemological Institute (India) Limited (IGIIL) is one of the World’s Largest Independent Grading and Accreditation Services Providers With 31 laboratories and 18 schools in 10 countries, IGI employs a global workforce of experts and educators dedicated to industry service and consumer protection. At the upper end of the price of Rs. 417, the issue quotes PE of 83x of its FY25 annualized earnings. The issue looks appears to be fully priced. Only long-term investors may apply.

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