International Gemological Institute Limited Q3 FY2026 Concall Summary

Key Takeaways

• A quarter that proves the thesis: Revenue grew 21% and volume grew 11%, driven by the structural need to certify both natural and lab-grown diamonds as the two categories proliferate side by side.
• Natural diamonds surged 45% as consumers and trade increasingly demand certification to distinguish natural stones from lab-grown, validating IGI's neutral position at the centre of that trust problem.
• Operating leverage is compounding: EBITDA margin reached ~60% for the full year, up from 57% in FY24, marking eight consecutive quarters of improvement.
• The US is the next battleground: Fresh leadership, cost rationalization and a competitor's grading-structure change are converging to make the US a critical strategic priority for FY26.
• What to watch next quarter: Whether the mass hiring underway converts into sustained volume capacity, any early signs from the US strategic push, and the pace of the consumer brand-building spend that management flagged for the next 12–18 months.

The Certification Flywheel: Natural Meets Lab-Grown

• Natural diamond certification is now a defensive consumer need: As lab-grown diamonds flood the market, buyers want proof that a natural stone is natural, not lab-grown, turning certification from a nice-to-have into a purchase requirement.
• Lab-grown certification is the offensive counterpart: Buyers of lab-grown diamonds want assurance the stone is genuine and not a simulant like glass, making certification equally indispensable.
• IGI sits at the intersection: The company certifies both origin and the 4Cs for each category, a neutrality that management argues neither natural-only nor lab-grown-only competitors can replicate.
• The result is a flywheel: Proliferation of lab-grown diamonds drives natural certification demand, while lab-grown's own growth creates a parallel certification stream, and IGI captures both.

Tehmasp Printer: "If you want to buy a natural diamond, certified by IGI becomes a real factor. Why? Because you want to know it is not a lab-grown diamond. If you want to buy a lab-grown diamond, certification becomes imperatively because you want to know that it is not a piece of glass."

Segment Performance & Mix Dynamics

• Mix shift is modest but real: Over a 12-month view, there has been a 1–2 percentage point shift toward natural diamond and lab-grown loose stones, driven by capacity additions in loose stones and the emerging lab-grown jewellery trend. Management expects no dramatic further shift.
• Jewellery vs loose-stone economics: Jewellery reports carry lower per-unit realization because clusters of small, similarly graded diamonds are reviewed together with split grades, while loose stones go through 14 individual parameters with exact grades.
• ASP stability: Realization has held in the 900–950 range for the last 4–5 quarters, and management sees no structural change to the pricing model.

Competitive Moat & Market Share

• A competitor's misstep opened the door: A rival changed its grading structure, and clients are shifting to IGI because it is an independent laboratory neutral to all gemstones, not biased toward any category.
• Trust is the entry barrier: Management argues that 50 years of legacy, expertise and accumulated gemologist talent create a moat that cannot be replicated quickly, and that trust is the single most important factor in certification.
• Market-share strategy in natural diamonds: IGI has spent the last 12 months deliberately penetrating a larger customer base in natural diamonds, and the 45% growth suggests that effort is converting.

Tehmasp Printer: "We are an independent grading laboratory. So, we don't carry any biases against any gemstone. We are neutral to all gemstones and diamonds."

Margins & Operating Model

• Eight quarters of consistent margin expansion: EBITDA margin reached ~60% for FY25, up from 57% in FY24, driven by operating leverage as volume growth flows through a relatively fixed cost base.
• US cost rationalization underway: Management has cut wasteful expenses in the US and is redeploying those savings into building organizational capability and strength, framing the US as a critical strategic priority for FY26.
• Debtors rose on credit terms, not stress: The increase in receivables from ~15.5% to 19% of sales reflects a 60-day credit period extended to some large lab growers; with scaled-up volume, the absolute AR balance rose but remains within agreed terms.
• Other financial assets jumped on cash accumulation: The increase from INR13 crores to INR188 crores is cash in bank and fixed deposits, giving the balance sheet firepower for the M&A options management says it continuously evaluates.

Capacity, Hiring & Investment

• Mass hiring has begun: The company recruited close to 200 people at the start of 2025 and has started another large round as it sees exponential volume growth ahead.
• Hiring is calibrated to service quality, not just volume: Recruitment targets are set internally based on optimizing customer experience, specifically turnaround times, alongside supporting revenue growth; management declined to give a specific volume-capacity number.
• Brand building is entering a new phase: IGI co-sponsored the Women's World Cup as its first consumer reach-out program and expects greater brand-building exercises over the next 12 to 18 months.
• ESOP grant signals long-term alignment: 1.8 crore ESOP shares were granted with vesting over five years, 60% after three years, subject to conditions and gate conditions; details are in the DRHP.

Tehmasp Printer: "The most important factor here is trust. And trust is not something that you can acquire in a small brief time. We have 50 years of legacy plus 50 years of expertise plus 50 years of expert gemologist that we have over the last many decades. So, all in all, the entry barrier is extremely high."

Guidance & Commitments

Key Metrics