Lab Growns Drive 73% of IGI Certification Revenue Growth
October 27, 26
(IDEX Online) - Lab grown diamonds accounted for nearly three-quarters of International Gemological Institute's (IGI) certification revenue growth in the second quarter (to September 30), highlighting the company's growing reliance on the segment.
Certification revenue from lab grown loose stones rose 37% year on year to INR 2.111 billion (about $23.9 million), while lab grown diamond jewelry revenue increased 47% to INR 356 million (about $4 million), according to IGI's investor presentation published on October 21.
Together, the two lab grown categories generated INR 686 million (about $7.8 million) of the INR 934 million (about $10.6 million) increase in certification revenue, or approximately 73% of the total rise.
The contrast with natural diamonds was marked. Revenue from loose natural diamond certification grew 8% to INR 529 million (about $6 million), while natural diamond jewelry certification rose 3% to INR 635 million (about $7.2 million).
IGI's total certification revenue increased 32% to INR 3.875 billion (about $43.8 million). Lab grown loose stones accounted for 54% of certification revenue, compared with 14% from natural loose stones. Natural diamond jewelry nevertheless generated more certification revenue than lab grown jewelry.
IGI global CFO Eashwar Iyer attributed the strength of the lab grown business to additional production capacity and significant retail investment in lab grown jewelry in an October 22 interview with CNBC-TV18, an Indian business news TV channel.
"We believe that both the segments are going to coexist because each of them satisfy a specific consumer need," he said.
The first-half figures show the same trend. Certification revenue from lab grown loose stones rose 31% to INR 4.206 billion (about $47.6 million), while lab grown jewelry revenue increased 46% to INR 637 million (about $7.2 million).
Natural loose-stone certification revenue grew 7% to INR 1.033 billion (about $11.7 million), and natural diamond jewelry revenue rose 3% to INR 1.149 billion (about $13 million).
Lab grown loose stones and jewelry accounted for about 65% of first-half certification revenue, compared with approximately 29% from natural loose stones and jewelry.
Despite slower growth in natural diamonds, Iyer said IGI remained committed to increasing its market share in the segment. Natural diamond certification grew 8% in the first half, and he expects it to reach double-digit growth for the full financial year.
"We've grown some 8% in H1 this year and we expect that to hit double digits as we close the year," he said.
IGI says it does not favor either category and maintains its grading standards across both. Its results show, however, that lab grown diamonds are contributing much more to growth, while natural diamonds remain an important business it is seeking to develop.
IGI reported 4.35 million certification reports in the second quarter, up 26% year on year. Revenue from operations rose 31% to INR 3.98 billion (about $45 million), EBITDA increased 39% to INR 2.445 billion (about $27.7 million), and net profit climbed 43% to INR 1.858 billion (about $21 million).
The company has raised its original full-year guidance of 15% revenue growth and 20% EBITDA growth, saying it expects to outperform those targets in line with first-half performance.
Video grab shows IGI global CFO Eashwar Iyer speaking on CNBC-TV18.