International Gemological Institute Limited — Q1 FY26 earnings call

Call held 29 Jul 2025

Management summary

IGIL delivered a robust performance in Q2 CY25 (aligned with Q1 FY26), characterized by strong volume growth across both natural and lab-grown diamond segments. While EBITDA margins saw a sequential dip to 58% due to one-off AI investments and a shift in product mix, management remains confident in its full-year guidance. The company is strategically positioning itself to benefit from GIA's exit from full 4C LGD grading and is investing in digital transformation to maintain its market leadership.

Highlights

  • Revenue from operations grew 20% YoY to ₹314 crores in Q2 CY25

  • EBITDA increased 37% YoY to ₹174 crores, with margins at 58%

  • PAT surged 63% YoY to ₹127 crores, driven by cost optimization and revenue growth

  • Report volume reached 3.03 million in Q2, a 21% increase over the previous year

  • Lab-grown diamond (LGD) segment grew 24% YoY, while Natural Diamonds grew 14%

  • LGD Jewelry certification in India saw a significant 35% growth in Q2

  • Company maintains a dominant market share of over 50% in India and 65% globally in LGD certification

  • Net cash balance on the balance sheet exceeds ₹750 crores

Key financials

  1. Total Revenue ₹314 Cr +20%YoY
  2. EBITDA ₹174 Cr +37%YoY
  3. EBITDA Margin 58% -6%QoQ
  4. PAT ₹127 Cr +63%YoY
  5. Report Volume 3.03 Mn +21%YoY
  6. Average Selling Price (ASP) ₹963 -3%YoY

What they filed

Q1 FY27: revenue up 23.3%, net profit up 30.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue250 265 305 301 304 +22%320 +21%369 +21%371 +23%
EBITDA147 152 196 174 176 +20%191 +26%236 +20%224 +29%
Net profit110 114 141 127 130 +18%135 +18%180 +28%166 +31%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentRevenue GrowthH1 Revenue Growth
Lab-Grown Diamonds (LGD)24%16%
Natural Diamonds14%7%
LGD Jewelry——

Guidance & targets

Revenue

  • Annual Revenue Growth Revenue · CY25 · High confidence 15-20%
    the Company had given a forward-looking statement of a 15% to 20% growth from a revenue standpoint... we are confident of delivering to what we had committed at the beginning of this year.

    — Eashwar Iyer, CFO

Margin

  • EBITDA Margin Band Margin · CY25 · High confidence 57-64%
    Between 57% to 64% EBITDA margin is what the Company will deliver this year.

    — Eashwar Iyer, CFO

Other

  • Other Expenses Other · Next Quarters · Medium confidence ₹50 crores

    From ₹56 crores today

    I think we are at around INR56 crores. I think we should probably get back to the INR50 crores level.

    — Eashwar Iyer, CFO

Dividend

  • Dividend Declaration Dividend · FY26 · Medium confidence Board Guidance
    we will be seeking guidance from the Board as far as dividend declarations are concerned. That is actively in consideration for the management.

    — Eashwar Iyer, CFO

Risks & concerns

  • US Import Tariffs

    medium

    An additional 10% levy on jewelry and stones exported to the US is causing industry-wide anxiety, though IGI claims no direct financial implication.

    Both acknowledged

  • LGD Pricing Bottoming

    medium

    Wholesale returns on LGD are estimated at 8-10%, suggesting very little room for further price drops by manufacturers.

    Analyst acknowledged

  • Luxury Segment Slowdown

    low

    Sorting business in Europe has seen a slight slowdown as super luxury brands reduce activity.

    Management acknowledged

Areas of evasion (1)

  • Specific price differentials between full reports and dossiers were generalized rather than giving exact figures.

Q&A highlights

3 direct
Sequential Margin Compression Direct
Normally, we have a huge ramp up in the quarter four and quarter one... Additionally, I think you will also notice that we're making some significant investments to build up an AI architecture in the organization.

Explains the dip from 64% to 58% EBITDA margin as a mix of seasonality and strategic one-off tech spending.

Asked by Sheela Rathi, Morgan Stanley

ASP Stabilization and Pricing Outlook Direct
sequentially the ASP is actually improved by some 3%-4% at the India level... So I think we've seen a lot of stability in the last three-four quarters.

Confirms that the aggressive pricing cuts of the previous year have stabilized, reducing risk of further realization erosion.

Asked by Harit Kapoor, Investec

Competitive Shift (GIA stopping LGD 4C grading) Direct
GIA, in fact, didn't want to certify lab-growns initially... suddenly they've taken a U-turn that we will stop grading... I can only use it to my advantage, which I am doing.

Highlights a major competitive advantage as IGI remains the primary provider of full 4C grading for the fast-growing LGD market.

Asked by Raman, Sequent Investment

2 min read 5 chapters

Detailed narrative

Volume Growth Offsets Pricing Headwinds

IGIL reported a 21% YoY increase in report volumes, reaching 3.03 million for the quarter. This volume surge successfully offset a 3% YoY decline in Average Selling Price (ASP), which was primarily driven by a higher mix of smaller stones in the natural diamond segment. Management noted that ASP has improved 3-4% sequentially, signaling a stabilization in the pricing environment after the volatility seen in 2024.

Strategic AI Pivot Impacts Short-term Margins

EBITDA margins for the quarter stood at 58%, a decline from the 64% reported in the previous quarter. This compression was attributed to a one-off investment in AI architecture and digital transformation initiatives aimed at reducing turnaround times. Additionally, the quarter saw a seasonal shift away from high-margin jewelry certification, which typically peaks in Q4 and Q1.

LGD Jewelry Emerges as a New Growth Engine

While the core LGD stone business grew at 24%, LGD Jewelry certification in India surged by 35% YoY. Management highlighted that India is rapidly gaining momentum in LGD acceptance, following the US trend where over 50% of bridal jewelry now features lab-grown stones. IGI's role as a 'market policeman' providing origin transparency is critical to this segment's expansion.

Competitive Advantage from GIA Strategy Shift

Management addressed the recent decision by GIA to move away from full 4C grading for lab-grown diamonds. CEO Tehmasp Printer characterized this as a 'U-turn' that IGI intends to use to its advantage. By continuing to provide full 4C analysis and origin certification, IGI remains the laboratory of choice for consumers and retailers who demand standardized grading for LGDs.

Robust Cash Position and Capital Allocation

The company ended the period with a net cash balance exceeding ₹750 crores, generating approximately ₹300 crores of cash annually. Management is actively evaluating inorganic growth opportunities through acquisitions and is seeking board guidance for potential dividend declarations. Capex remains focused on infrastructure ramp-up to support the projected 15-20% annual volume growth.

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