Is International Gemmological Institute IPO Good or Bad?

International Gemmological Institute IPO is kicking off its initial public offering which will be open from December 13, 2024, to December 17, 2024. While considering applying for this IPO, certain questions may arise in your mind, some of which include whether the International Gemmological Institute IPO is good or bad, whether it is worth investing in this IPO, and so on. 

This article offers an International Gemmological Institute IPO review, covering its business operations and fundamental analysis to help you make an informed investment choice.

Company Overview of International Gemmological Institute IPO

The International Gemmological Institute offers various specialized services tailored to the gem and jewelry industry. They provide detailed assessments of diamonds through grading reports that evaluate attributes like cut, color, clarity, and carat weight, as well as additional features such as fluorescence and symmetry. They also extend their expertise to colored gemstones like rubies, sapphires, and emeralds, offering authenticity checks and quality grading. Beyond practical services, they also focus on education, offering gemology, diamond grading, and jewelry design courses through the IGI Schools of Gemology. 

The International Gemmological Institute (IGI) is recognized as the world's second-largest provider of certification and accreditation services for diamonds, studded jewelry, and colored stones, holding a 33% market share by number of certifications in 2023. 

According to the Redseer Report, IGI is esteemed in the gem certification industry and is especially dominant in the rapidly expanding market for laboratory-grown diamonds, where it commands a 65% market share. Furthermore, IGI also has a significant 42% market share in studded jewelry certifications in 2023.

The International Gemmological Institute (IGI) started in Belgium in 1975 and has grown a lot since then. By September 2024, IGI had 31 offices in 10 countries, with labs in each one, and 18 gemology schools in 6 countries. Furthermore, the company is in the process of acquiring the IGI Belgium Group and the IGI Netherlands Group, helping it become even more prominent in the world of gemology.

As of September 2024, IGI serves a wide variety of customers worldwide of over 7,500 ranging from diamond growers to jewelry retailers, and has established enduring partnerships with numerous prominent jewelry brands and retailers.

IGI’s certification business is conducted through its global network of 31 branches as of September 30, 2024, which are equipped with IGI laboratories located across 10 countries, including in key markets such as Surat and Mumbai in India, Antwerp, Belgium, New York, USA, Bangkok, Thailand, Dubai, UAE, Hong Kong and Shanghai, the PRC, among other cities. IGI’s global presence allows it to serve customers across geographies and assists in providing timely and accessible services. 

Industry Overview of International Gemmological Institute IPO

The global jewelry market stood at INR 26,600 billion (USD 320 billion) in 2023. Since 2020, the market has rebounded, achieving a Compound Annual Growth Rate (CAGR) of 9%. Over the longer term, from 2019 onwards, it has experienced a CAGR of 1%. Post-COVID-19, gold and diamond-studded jewelry markets grew at a CAGR of 18% and 12%, respectively, from 2020 to 2023, they are currently the two largest contributors, constituting a 74% market share.

The global jewelry market is expected to grow at a CAGR of 3-6% in value terms from 2023 to 2028, with the gold and diamond-studded jewelry market expected to grow at a CAGR of 5% and 6%, in value terms, respectively, over the same period

The Indian jewelry market stood at INR 5,300 billion (USD 64 billion) in 2023. Due to the COVID-19-induced lockdowns, footfall in jewelry stores was reduced; weddings, which generate most of the jewelry demand in the country, were postponed, and weddings took a backseat. This resulted in a dip in jewelry purchases as a gift or celebratory gesture, leading to the market shrinking by 28% to reach INR 3,400 billion (USD 41 billion) in  2020. However, the market rebounded after the pandemic, driven by pent-up consumer demand, growing at a CAGR of 16% to reach INR 5,300 billion (USD 64 billion) in 2023. 

Diamond-studded jewelry, the second-largest segment, accounted for around 7% of the market in 2019, growing rapidly to INR 780 billion (USD 9 billion) by 2023, contributing around 15% to the overall market. The diamond-studded jewelry market is expected to drive India’s jewelry market by growing at a projected 20% CAGR from CY 2023 till CY 2028. 

In the Indian jewelry market, gold has traditionally held the largest share, representing around 87% in 2019. Post-COVID19, gold jewelry observed a 14% growth from 2020 to 2023 to reach INR 4,300 billion (USD 52 billion) due to pent-up demand and weddings returning to pre-pandemic scale, but the share of gold jewelry reduced to 82% in 2023. The contribution to the overall market is expected to decline to 70-75% by 2028 as other categories become more prominent.

Financial Overview of International Gemmological Institute IPO

International Gemmological Institute experienced strong growth in its operational revenue, reporting Rs.638.52 crores in CY23, a significant rise from Rs.490.99 crores in CY22 and Rs.364.69 crores in CY21. Additionally, for the nine-month period ending September 30, 2024, the company recorded operating revenue of Rs.596.35 crores. Such an increase was primarily due to an increase in revenue from the certification of natural diamonds, laboratory-grown diamonds, studded jewelry, and colored stones.

International Gemmological Institute reported an EBITDA of Rs.450.11 crores in CY23 marking a significant increase from Rs.335.18 crores in CY22 and Rs.240.64 in CY21. Additionally, for the nine-month period ending on September 30, 2024, the company's EBITDA stood at Rs. 429.18 crores This growth indicates that the company is not only earning more revenue but is also managing its costs effectively.

The Profit After Tax (PAT) was reported at Rs.324.73 crores in CY23 compared to Rs.241.75 crores in CY22 and Rs.171.53 in CY21. Additionally, for the nine months ending on September 30, 2024, the company has reported a PAT of Rs. 326.06 crores, indicating sustained financial growth into the latter part of CY23. The overall increase in the cost is also being reflected in the PAT margin which has increased from 3.98% from CY21 to CY23.

For the Calendar year 2023, the company has reported a RoNW of 76.58% compared to 83.13% in CY22 and 74.39% in CY21. Similarly, the company has experienced a decrease in Return on Capital Employed (ROCE) over recent years, with an ROCE of 80.96% in CY2023, a decline from 87.09% in CY2022 and 86.79% in CY2021. Although there was a slight in these ratios compared to the previous financial years, the company continues to generate strong returns and uses its capital efficiently, indicating a robust business model.

International Gemmological Institute Vs Peers

According to the red herring prospectus (RHP), there are no publicly listed companies in India or internationally among IGI's global peers. As a result, it is not possible to draw comparisons with industry peers for this company.

Objective Of International Gemmological Institute IPO

The International Gemmological Institute aims to raise funds through its IPO primarily to finance the acquisition of IGI Belgium Group and IGI Netherlands Group. Additionally, the funds will be used for general corporate expenses to support the company’s overall business operations and growth.

International Gemmological Institute IPO Details

IPO Date

International Gemmological Institute IPO is open to subscription from December 13, 2024, to December 17, 2024. The shares will be allocated to investors on December 18, 2024, and the company will be listed in the NSE and BSE on December 20, 2024.

IPO Issue Price

International Gemmological Institute IPO is offering its shares in the price band of Rs.397 to Rs.417 per share. This means you would require an investment of Rs.14,595 per lot (35 shares) if you are bidding for the IPO at the upper price band.

IPO Size

The International Gemmological Institute IPO is offering a total of 101,318,944 shares, amounting to Rs. 4,225 Crores. 

This includes an offer for sale of 65,947,242 shares, totaling Rs. 2,750 Crores, alongside a fresh issue of 35,371,702 shares, worth Rs. 1,475 Crores.

IPO GMP

Many investors look at the Grey Market Premium (GMP) before applying for the International Gemmological Institute. The GMP gives an idea of market sentiment and can hint at the possible listing price. However, it should be noted that it does not reflect how financially strong the International Gemmological Institute is. Thus, it is important to financially analyze the stock before investing in it.

IPO Allotment Status

The shares from the International Gemmological Institute IPO will be allotted to its investors on December 18, 2024. One can check the allotment status for the IPO from its registrar Kfin Technologies Limited, the BSE website, or your broking platform where you have applied for the IPO.

IPO Application Link

Open a demat account with Rupeezy today and enjoy a seamless experience when applying for the IPO. With an easy-to-use platform, Rupeezy makes the IPO application process quick and hassle-free. Click on the apply link below to get started.

Apply for International Gemmological Institute IPO

International Gemological Institute IPO Review: Final Thoughts

The International Gemmological Institute's IPO appears to be a promising investment opportunity, given its robust position as a major player in the gem certification market and its commanding shares in specific segments like laboratory-grown diamonds. IGI is the second-largest independent diamond and jewelry certifier globally, operating in a competitive industry with high entry barriers. The company boasts a strong global presence and has demonstrated significant financial growth, with impressive increases in revenue and profits in recent years. 

The IPO's main goal is to fund the acquisition of additional operations, which could further enhance its services and market reach. These acquisitions are expected to boost IGI’s financials even more. Investors should look carefully at both the opportunities and risks before investing in the IPO.