PE Near Historic Lows: This Stock Hits 10% Upper Circuit as Margins Expand 340 bps to 61.4%; Festive Demand Outlook Strengthens

International Gemological Institute Ltd (IGI) reported a 43 per cent YoY rise in consolidated profit after Tax (PAT) to Rs 185.8 crore for the quarter ended September 30, 2026, as stronger certification volumes and favourable business mix lifted profitability. Consolidated revenue from operations rose 31 per cent to Rs 398 crore from Rs 303.7 crore in the corresponding quarter of FY26.

EBITDA increased 39 per cent to Rs 244.5 crore from Rs 176.3 crore, while the EBITDA margin improved by 340 basis points to 61.4 per cent. Profit before tax grew 40 per cent to Rs 245.6 crore and PAT margin stood at 46.7 per cent, underlining the operating leverage in IGI’s certification-led business model.

The company delivered 4.35 million reports during the quarter, up 26 per cent YoY. Since certification revenue is largely recognised when grading services are completed, the increase in report volumes is an important indicator of underlying business activity. Revenue growth outpaced report-volume growth, supported by category mix and the rising contribution from higher-growth certification areas.

Lab-grown diamond loose-stone revenue increased 37 per cent YoY, while lab-grown diamond jewellery revenue rose 47 per cent. Natural diamond loose-stone revenue grew 8 per cent and natural diamond jewellery rose 3 per cent. Coloured gemstones revenue grew sevenfold, including the contribution from AGL, the US gemstone certification business acquired by IGI in February 2026.

For the first half of FY27, revenue from operations increased 27 per cent to Rs 768.8 crore, while PAT rose 37 per cent to Rs 351.6 crore. EBITDA margin for the half year improved to 60.9 per cent from 57.8 per cent, with report volumes increasing 22 per cent to 7.91 million.

Tehmasp Printer, Managing Director and CEO, said lab-grown diamonds were witnessing higher adoption, while natural diamonds and gemstones remained important growth opportunities. He added that the festive season in India and the US holiday ordering cycle were generating encouraging trends across the company’s business segments.

The result reinforces IGI’s strategy of operating across natural diamonds, lab-grown diamonds, jewellery and coloured gemstones rather than relying on one product category. Its global laboratory network, technology investments and growing consumer focus on third-party certification remain central to this approach.

DSIJ's Exclusive Analysis

IGI’s second-quarter performance strengthens the case that certification demand is scaling faster than its cost base. Revenue rose 31 per cent, while EBITDA grew 39 per cent and margin expanded to 61.4 per cent, showing that additional report volumes are translating into meaningful operating leverage. The 26 per cent rise in reports to 4.35 million is particularly relevant because certification is the company’s core service revenue stream.

Lab-grown diamonds remain the principal growth engine, but the sevenfold increase in coloured gemstone revenue suggests that AGL is beginning to broaden IGI’s addressable market beyond diamonds. That diversification matters strategically, although the company has not disclosed AGL’s precise revenue or profit contribution.

For investors, the update is potentially supportive because it combines strong earnings growth with margin improvement and wider category participation. However, the durability of this momentum will depend on sustained lab-grown diamond capacity expansion, stable certification pricing and IGI’s ability to maintain turnaround times as report volumes rise. Customer concentration among large lab-grown diamond growers remains the most material limitation to an otherwise improving operating profile.

International Gemological Institute Valuation

International Gemological Institute (IGI) has witnessed a notable correction in its valuation multiple despite an improvement in earnings. The stock's price-to-earnings (P/E) ratio has declined from over 60x in early 2025 to around 20x in October 2026, well below its historical median P/E of 29.2x. Meanwhile, trailing twelve-month earnings per share (TTM EPS) have increased from around Rs 10.6 in April 2025 to approximately Rs 15.4 in October 2026.

This divergence indicates that earnings growth has been accompanied by a sharp valuation derating. Although the stock is trading below its historical median valuation, the sustainability of earnings growth will remain important in assessing its attractiveness at current levels.

International Gemological Institute Share Price Performance

International Gemological Institute share price hit the 10 per cent Upper Circuit on Thursday following the announcement of its Q2 FY27 results. Within the first hour of trading, the stock's trading volume had already surpassed its highest single-day volume recorded in more than five months.

Disclaimer: The article is for informational purposes only and not investment advice.