December 12, 2024
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International Gemmological IPO Review
Summary of Primary business of the Company
The Company is an independent certification and accreditation services provider for diamonds, studded jewelry and colored stones certifications. The Company is part of the International Gemmological Institute (“IGI”) group, and is responsible for the operation of the business under the “IGI” brand exclusively in India and Türkiye.
Over the years, it has significantly strengthened its relationships with customers and stakeholders through various initiatives. These include the introduction of co-branded reports, in-factory laboratory setups, mobile laboratory setups, and the continuous expansion of its certification and accreditation services. For instance, in 2021, the company launched in-factory laboratories for laboratory-grown diamond producers in India, enabling it to provide on-site certification services for a more convenient customer experience.
Its ability to attract and retain top talent has been a key factor in establishing our strong market position in India’s diamonds, studded jewelry, and colored stones industry. As of September 30, 2024, its network consists of 20 laboratories and 9 schools under the Pre-Acquisition Group, supported by 843 employees, including 316 gemologists and professionals in research, education, and certification. The gemologists within the Pre-Acquisition Group have an average tenure of 6.24 years with it as of September 30, 2024. Its commitment to innovation is further driven by its gemologists and research personnel, who stay current with developments in gemology by participating in global workshops, seminars, and educational programs within the diamonds, studded jewelry, and colored stones sectors.
As of September 30, 2024, IGI had over 7,500 customers located across 10 countries, including laboratory-grown diamonds growers, natural diamond and colored stone wholesalers, jewelry manufacturers and retailers. IGI has developed multi-year relationships with many brands and retailers, including international 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.
Guidance:
The company boasts robust fundamentals, with no debt on its balance sheet and a healthy cash reserve of ₹340 crore as of September 30, 2024. For the nine-month period ending September 30, 2024, the company reported an earnings per share (EPS) of ₹8.22, with a full-year EPS projected to reach ₹11. At the upper price band, the shares are priced at a P/E ratio of 37.91.
Given the duopoly nature of the business, its strong growth potential, and the absence of any debt, the shares are being offered at an attractive valuation. I strongly recommend applying for this IPO, not only for potential listing gains but also as a long-term investment. Similar to companies like CDSL, Cams, and BSE Ltd., this stock has the potential to become a multi-bagger.
Review by Paresh Gordhandas, CA and Research Analyst
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