IGI India gets a high rating from Morgan Stanley for its support to the LGD market

Morgan Stanley has initiated coverage on International Gemmological Institute India Ltd., offering a high rating and highlighting the company’s promising position within the expanding lab-grown diamond (LGD) market.

With a strong foothold in the diamond certification market, IGI stands out as the world’s second-largest certification and accreditation provider, holding a significant 33% global market share. IGI also dominates in the LGD sector and studded jewellery certification with market shares of 65% and 42%, respectively, in these segments.

While the proof of concept for LGDs remains a work in progress, IGI’s expertise in certification places it in a strong position to benefit from this evolving trend, the brokerage pointed out. In addition, the diamond certification market is projected to grow 5-10% annually from 2024 to 2028, reaching 30-40 million certificates by 2028, up from 22-26 million currently. This growth is primarily driven by a 25% increase in lab-grown diamond certification, expanding the industry’s size to approximately $1 billion from $0.6 billion.

India accounts for around 65% of global certification volumes, positioning IGI to benefit significantly from the rise in certification demand, particularly in the LGD sector.

According to Morgan Stanley’s note, IGI’s business model benefits from both the diamond cutting and polishing operations in India, where it holds 95% of the global market share. While India is a major production hub, demand for lab-grown diamond is primarily driven by the US, where 80-90% of lab-grown diamond consumption is concentrated.

Looking ahead, Morgan Stanley forecasts a robust 15% CAGR for IGI’s revenue and 20% CAGR for profit after tax through 2026, driven by expanding margins and increasing certification demand.