Editor’s Note
This article examines the potential impact of new U.S. tariffs on a major Indian company, IGIL, for which the American market is a primary revenue source. The analysis considers the strategic implications of this significant trade policy shift.
The United States is a crucial market for IGIL, contributing approximately 30-35 percent of its total revenue.
Effective from the end of August 2025, the US government imposed a significant 50 percent tariff on certain Indian imports.
IGIL announced strong Q3CY25 revenue, showing a 21 percent increase compared to the previous year.
Certification volume saw a significant 26 percent rise.
Both natural diamonds and lab-grown diamonds (LGD) saw strong revenue growth, with natural diamonds up 29 percent YoY and LGDs up 24 percent YoY.
LGD jewelry revenue grew 26 percent YoY, while natural diamond jewelry revenue saw a 7 percent YoY increase.
Average realizations declined by 5 percent YoY, primarily due to an adverse product mix favoring lower-carat diamonds.
Operating margins were largely maintained YoY, and profit saw a healthy 18 percent YoY increase.
The company recorded strong double-digit top-line growth in Q3CY25, primarily driven by increased volume, indicating a robust demand scenario.
IGIL has stated that demand remains strong in its key end markets in India and the US.
Importantly, the company has not seen any significant adverse impact so far from the 50 percent US tariff on Indian imports.
Lab-grown diamonds (LGDs) are gaining popularity rapidly due to environmental friendliness, aesthetic similarity to natural diamonds, and significantly lower cost (approximately 75 percent cheaper).
In the US, LGDs now constitute a significant portion of bridal jewelry, especially engagement rings, and are also gaining popularity in India due to their cost-effectiveness and appeal in fashion and everyday wear.
The widening price gap between LGDs and natural diamonds in the US, expected due to tariffs from September 2025, will further boost LGD demand.
As a global industry leader in LGDs, with an estimated 55 percent market share, IGIL is well-positioned to benefit from this trend.
IGIL is actively expanding its reach by targeting new consumers across the jewelry retail value chain, including B2B (manufacturers, wholesalers, retailers) and B2C segments.
The company is also focusing on other product segments like natural diamonds, studded jewelry, and colored gemstones, and has gained market share in natural diamond certification.
IGIL is enhancing its branding and awareness initiatives, including sponsoring the Women’s Cricket World Cup.
Expansion into Middle Eastern markets, particularly Saudi Arabia, Kuwait, and Bahrain, is also underway.
IGIL operates a highly cash-generative business, with estimated operating cash flow for CY2025 of approximately Rs 550 crore and minimal capital expenditure requirements.
The company had a strong cash reserve of around Rs 750 crore as of June 2025.
This robust financial position allows IGIL to actively explore inorganic growth opportunities, such as acquiring smaller laboratories with strong regional presence to accelerate expansion.
At its current market price (CMP), IGIL is trading at a price-to-earnings (P/E) ratio of 22 times its estimated CY27 earnings.
Given the positive earnings outlook, strong growth drivers, and ample cash generation, analysts have recommended investors consider adding this stock to their portfolio.
This news could boost investor confidence in International Gemological Institute (India) Limited, potentially leading to positive movement in the stock price.
It highlights the resilience of the Indian gem and jewelry export sector against trade protectionism, especially in the growing LGD segment.
Strong performance and outlook could encourage further investment in companies focused on LGDs and certification services.
Impact Rating: 7