International Gemological Institute Limited (IGIL) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Q2LH1SF27ONX conference call of International Geomological Institute Ltd. hosted by MUFG Entire. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator where presence star, then zero on its archipelic phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Swamit Khaitan from MUFG in time. Thank you, and over to you, sir.

Good evening, everyone. I welcome you all to the earnings conference call to discuss Q2 and H1 F527 results of International Gemological Institute Ltd. To discuss the results, we have from the management, Mr. Taimah Sprinter, MDN CEO, Mr. Ishwar Ayer, CFO, and Ms. Natasha Kiria, Head of Investor Relations and Public Relations. They will take you through the results and the business performance, which we will proceed for Q&A session. Before we proceed with the call, I would like to mention that some of the statements made in today's call may be forward-looking in nature and may involve risk and uncertainties. For more details, kindly refer to investor presentation and other filings that can be found on the company's website. With this, I now hand over the call to the management for their opening remarks. Over to you, sir.

This has been the best quarter in IGI's history. Our volumes, our revenue, our EBITDA, and our profits were all the highest we have ever reported. We issued 4.35 million reports in the quarter, that is 26% more than the same quarter last year. In India, the volumes grew 19% on a year-on-year basis. Revenue from operations grew 31% to INR 3,980 million. For the first half of the year, revenue grew 27%, EBITDA grew 34%, and profit after tax grew 37%. The growth has come from all parts of the business. Labgrown grew the fastest. Natural diamonds also grew, even though the natural market did not. Colourstone growth has been led by AGL, and again, Ishwar will give you the segment numbers later on. Let me start by saying a few words about the market. In India, the festive season has started. Diwali is on the 8th of November, this year. Last year, it was on the 20th October, and so, some of the festive stocking that happened in September last year is happening in October this year. Even so, demand through the quarter was healthy and the trade has stocked up well for the season. The initial trends in October driven by the festive demand are also seeing good traction. Gold prices have been high and volatile. The buyers of the natural diamond jewelry are taking a little longer to decide as such the results of natural The jewelry certification grew only 3% in this quarter. Labgrown is not seeing this hesitation at all. At our investor day in August, we spoke about Labgrown diamonds under three heads, supply, retail, and buyer. Let me take you through each one briefly so that we can see what we saw in this quarter. On supply, large Indian growers are adding reactors and are doubling their capacity in three years. Supply is at its base and not at its peak. In the quarter, Labyrinth Blue certification grew 37%, signaling a robust supply ramp-up. On retail, certification demand is created at the retail end. The certificate costs less than 2-3% of the retail price, and it is the very reason why consumers buy with confidence. In India, lab-grown chains are opening up stores, and established jewelers have also launched their own lab-grown brand. In the United States, more than 50% of all bridles are now lab-growns, and other markets are likely to follow this trend. And our Labyrinth Jewelry Certification grew 47% in this quarter as a retailer stock-up for the season. On the buyers, for many families, Labyrinth Diamond is the very first diamond that they buy. With an increase in household income, they buy more pieces, bigger stones, and over many years, over the coming years, they will move to natural diamonds. We certify natural diamonds, we certify labyrinth diamonds, color stones, and do the same standards. It is the IGS certificate that makes the labyrinth diamond a diamond, and it is the same certificate that also protects the value of a natural diamond. Furthermore, last month in Bombay, the Union Home Minister, Sri Amit Shah, asked the industry to keep the entire Labyrinth diamond chain in Indian hands, from machines to the showrooms. He said the Labyrinth market could grow many times over its current size. We welcome this. IGI was the first international laboratory to certify Labyrinth Diamonds way back in 2005. A market of this size meets an independent standard that the whole world will accept. That is what IGI provides, and that is the role that we intend to keep. Our priorities continue to be focused on, one, accelerate the natural diamond growth and gain market share. The aim is to grow faster than the market and gain market share. In a market that did not grow, our natural loose certification grew 8%, where our share is the highest in the industry. Second point, continued leadership and lab-grown diamonds. I have covered the numbers. What matters now is the capacity ramp-up and the service through the festive peak for which we are well prepared. Scale up on gemstone acquisition through the integration of AGL. AGL has been part of the IGI group since January. We are building colorstone capabilities in our other laboratories using AGL methods, and we have started offering the services to our jewelry clients. The IGI color gemstone strategy is being shaped in collaboration with AGL With technical review of IGL process and reporting along with review and standardization of testing equipment. While we have seen some green shoots, we are working to build a continued momentum in this space. Including dedicated setups of large customers, IGL itself is ready for a growth starter and expansion into the key gemstone markets. The continuous investment on the brand, we are taking IGI from a name that the trade trusts and recognizes to the consumer who will ask for it. We initiated our B2B2C marketing initiatives in the first quarter through an IPL partnership. We have further expanded in those initiatives through targeted media campaigns consistency in its quarter across geographies. Results of which are indicated below. The marketing ROI. We have created clear KPIs to call out. Brand research volume. Idea is up by 66% since March 26th. Reach. We are reaching 20 million unique audience every quarter consistently. Overall, 150 million plus views on our campaigns on a year-to-date basis. We have upped our ante on facilitating key joint campaigns to accelerate festive sales for retailers, for example, Pooza campaign in the West Bengal for natural diamond jewelry, V1 in the NCR with consortium of LG jewelers. We are building capabilities to create regional content and strategy both within India and across the key global geographies to build brand-based self-salience with the end customer. The fifth point is leveraging AI and machine learning for operating effectiveness. AI-based work allocations and scheduling is now in the use of laboratories. The same team is grading more stones more efficiently and faster. The grading standards itself always remain constant and do not change. Our network also keeps growing. We started operations in Italy this year. Saudi Arabia is being prepared. In September, we set up a company in Botswana. In our overseas laboratories, certification revenues grew by 31% without AGL, and the business is increasingly profitable. With that, I would now like to invite our CFO, Mr. Ishwar Ayer, to take you to the financial performance for the quarter and the half year. Ishwar, over to you.

Thank you, Dermas, and thanks, everyone, for taking the time for joining today's conference call. I will start with an update for the quarter, followed by an update for the first half, and then we will also talk of some balance sheet metrics. I'm talking about the consolidated group performance for the quarter. The company has reported strong quarterly results. 4.35 million reports, which is a 26% growth year-on-year. Total revenues from operations at INR 3980 million is up 31%. Certification Revenue at 3875 million, up 32%. EBITDA for this quarter, Crockton at 2445 million, growing 39%, with margins at 61.4%, which is 340 basis points above the same time last year. PAT at 1858 million is up 43%. This was primarily driven by robust revenue growth across all our segments, namely LGD which grew 37%, LGD Jewelry growing 47%, Gemstones and other certification growing 331%. This quarter has also seen a strong performance from our subsidiaries. Revenue growth during this quarter clocked in at 49%. If we were to exclude the AGL consolidation on a like-to-like basis, the subsidiary business for this quarter has grown 31%. The AGL acquisition enabled an incremental 3% revenue growth. I mentioned about certification revenue growing 32%. If we were to discount the AGL consolidation, that A's business delivered 29% revenue growth for the quarter. The ARP for the quarter reported at 891 rupees, registering a 4% improvement versus the previous year. The AGL consolidation gave us 2 percentage points gains, and the base business ARP has grown 2% on a higher LGD loose stone mix. On a sequential quarter basis, realizations, the business has grown around 8%, with EBITDA growing at around 9% for the sequential quarter. Coming to the EBITDA performance at $2445 million, reflecting a growth of 39% compared to the previous year. The EBITDA margin for the quarter stood at 61.4%, an improvement of 340 basis points on a year-on-year basis. The AGL acquisition has contributed 2% of the incremental growth to the EBITDA. Consequently, PAT reported at 1858 million, moving 43% to previous year. PAT margin stood at 46.7% for the quarter, which is up 400 basis points over the previous year. I will now cover the India standalone results for the quarter. In terms of revenue, certification revenue for the PDEP stood at 3040 million, growing 28%, supported by strong volume growth of 19%. This was primarily driven by strong revenue growth across our core segments, namely LGD growing 40%, LGD jewelry at 29%, gemstones and other certification grew 343%. Total revenue The value from operations for the quarter stood at 3056 million, registering a growth of 27%. ARP for the quarter reported at INR 827 versus the previous year of 773, which is up 7%, driven by an increased mix of LGD stones, which is up 6%. EBITDA growth reported at 2123 million, reflecting a growth of 21% compared to the previous year. EBITDA margin stood at 69.5% versus 72.8% in the previous year. It is down 340 basis points. Obviously, this has been driven by certain investments that we made from an employee leadership standpoint plus additional marketing plus commission expenses, which we have talked about in the previous quarter as well. Consequently, PATH reported at 1697 million, growing 22% compared to the previous year period. PATH margin stood at 55.5% for the quarter versus 57.8% in the previous year. I am now covering the H1 results summary. As far as good performance, the first half has delivered an exceptional revenue growth of 27% from a revenue standpoint, and an EBITDA growth of 34% with PATH growth at 37%. The group delivered a revenue from operations of 7688 million, a 27% year-on-year growth, led by a 22% volume growth. Revenue growth has been led by a 31% growth in NGD blue stones, 46% growth in NGD jewellery, and a 261% growth in gemstones and other certifications. AGL revenues for H1 contributed to 3% of this growth, with the base business therefore growing 24%. ASP for H1 was reported at INR 945 versus 905 for the corresponding previous year is up 4%. AGL contributing 2% of this increase and the base business ARP growing 2% on the increased LG remix. EBITDA delivery at INR 4683 million is growing 34% with margins at 60.9% which is up 310 basis points over the corresponding year. Agile acquisition has of course contributed another 2% of this incremental growth to the EBITDA. Pat delivery at INR 3516 million, growing 37%, with margins at 45.7, which is up 330 basis funds over the corresponding period. Coming to the India standalone performance for the first half, the India business has reported revenues from operations at 5918 million, growing 25%, with volumes growing 20%. The revenue growth has been led by a 35% growth in LGD loose stones, 32% growth in LGD, and a 245% growth in gemstones and other certification. ARP for H1 reported at INR 847 versus 814, which is up 4%, on an increased LGD mix, which is 5% up versus the same time last year. EBITDA delivery at INR 4093 million, growing 18%, with margins at 69.2% versus 72.9%. PAD delivery at INR 3243 million, growing 17%, with margins at 54.8% versus 58.2%. A drop of 340 basis points in line with whatever I have articulated earlier relating to additional So, from a balance sheet perspective, as of the quarter close, the group recorded a cash and bank balance of 10749. For ease, it is 10074 million rupees of cash and bank balance. Operating cash flow for the half year was INR 4157 million. 89% of the EBITDA and 118% of the PAT, helped by a working capital release of around 662 million, as receivables have fallen from a peak of around 2885 million to 2402 million. On capital, the board declared a first interim dividend of IRNR 2.55 per share in August, which was paid in September. Our priorities as articulated during the investor day remain unchanged. We invest in capacities, geographies, and technology, selective bolt on activations, and return surplus cash with the board reviews with each set of results. Coming to the outlook for the full year, in May, we have given a guidance of 15% revenue growth and a 20% EBITDA growth over the full year 2027. However, given the cost of performance, which has come well ahead of what, with revenues growing 27% and EBITDA growing at 34%, this was driven by strong industry tailwinds and from our own strong operational performance with operating leverage taking EBITDA growth ahead of revenue growth. The tailwinds are still with us, and so is the strength of our execution. We therefore expect to keep outperforming for the full year as well, similar to the H1 delivery. With that, I conclude my remarks, and I open the floor for any questions.

Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question, may press star and 1 on the touched one telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment for the question queue assembles.

The first question is from the line of Harit Kapoor from Investec.

Please go ahead.

Hi, good evening. Congrats on your excellence as numbers. Just had two or three questions from my end. First was, you know, this sharp pickup in the LGD revenue growth. While you've seen this, you know, in the past as well, but, you know, the numbers are very, very strong this quarter. I just wanted to understand, you know, is it a function of pre-ordering in terms of, you know, before festive, because this time festive has actually got a little bit delayed. So, you know, should we expect some tapering down in quarter three, you know, given that it's a very sharp increase? And similarly, on the natural side as well, given that, you know, the base was actually reasonably strong, should we expect a further pickup in growth? So, the opposite, in the opposite direction. So, should we take a higher growth, you know, as the festive starts to, you know, has moved into quarter three? So, just some nuances on kind of what's driven these growths would be very helpful. That's my first question.

Yeah. Hi, Arith. It's good to hear from you. Okay, Arith, I think a couple of questions. One is on the NGD growth, and the second one is on NGD growth. You know, going back to what we articulated during the investor day, we had actually mentioned the fact that there is significant capacity addition that is happening at the grower end, right? And from that standpoint, the momentum for the business continues from that standpoint. So we have seen business at more or less the same levels. If you were to look at the quarter two numbers, at the console level, at 2 triple 1 million rupees of LGD revenue, which is more or less the same as what we delivered in quarter one, which was 2095. So from that standpoint, we're starting to see scale up coming into our laboratories Laboratories for certification. We don't anticipate any slowdown as far as lab-grown businesses are concerned for the coming quarters as well. This is a tailwind from the industry, given the capacity addition that's happened at the grower end. Coming to natural diamonds, the business has showed 8% growth this quarter. The sequencing, we are seeing a 5% growth, and, you know, from an H1 standpoint, this business has grown 7%. We had a slow start to the year, as we had spoken in the last quarter, and we are starting to see some traction as far as National Diamond business is also concerned. We expect this momentum to continue into the next two quarters as well.

Got it. The second bit was on, again, on LG, you know, are you seeing a slightly more broad-based growth? I know growers are doing well in terms of the capacity additions, but the secondary customer, the customer set, which is the jewelers, are you seeing a more broad-based global growth now? You know, historically, it was kind of, you know, centered around the U.S., but are you seeing it being more broad-based now?

Two things here, Pariv. LGD jewelry this quarter has grown 47%, and H1 is 46%. So the consistency across both these quarters versus previous year is well established. And as we've discussed again during the investor call, there is markets opening up in Europe, Latin America, etc., and also Australia for that matter. I think that trend is continuing as far as the performance We expect to keep out performing for the full year as well, in lines with what we have delivered So, we expect the business to, obviously, therefore, beat the guidance that we have given for the year.

So, H2, you're saying, will be higher than the 15% revenue or 20% EBITDA growth as well. That's what you're trying to say. That's right. Okay. Wish you all the rest.

Thank you. The next question is from the line of Harish Adwarni from Access Capital Limited. Please go ahead.

Hi, congrats on a great set of numbers. My first question was on the guidance I was asked by the previous participant. Since there are anyways clocking well ahead of the 15% revenue growth and 20% EBITDA growth, can we relook the guidance? Because we are anyways kind of overshooting it pretty significantly. That's my first question. Yes, Arish, I think I just explained that we expect to outperform for the full year in line with what we have done for H1.

Okay, so no change to the estimates. Okay, fine. The second question was only...

Sorry, sorry, one second. We are saying that we are revising our 15 and 20% upwards, given the fact that H1 delivery has beaten our initial estimates for the full year.

Yeah, sure. So, my question was that, to what are we kind of revising it to?

That was my question.

Yeah, so we're saying it's going to be similar to what we have delivered in H1 from a growth side. Okay, perfect. Thank you.

The second question is on the cash that we are generating. How are we planning to utilize this cash that we've accumulated so far? Because since we are in any way an asset-like kind of business,

are we thinking more in terms of, say, higher dividend payout, Do we have some acquisitions that we are kind of evaluating at the moment? Yeah, so in line with what I've just mentioned, the priorities as far as CapEx allocation remains the same. Investing for growth, we've recently ventured into Italy and also venturing into Saudi Arabia. So growth takes the first priority, followed by M&A opportunities and then dividend payouts. So, very recently, as recent as September, is when we made this dividend payout. And again, we get guided by what the board decides on some of these dividend matters. So, you should expect that sequence to continue to follow for the subsequent quarters as well.

Okay. Perfect. Those were my two questions.

Thank you and all the best.

Thank you. The next question is from the line of Jitak Skupta from Tikri Investments. Please go ahead.

Hi, sir. Thank you for the opportunity. So, I just have one question. So, sir, we are constantly meeting revenue about the entire regions, also getting operating leverage on a consolidated basis. So, just wanted to understand, like, how do you see the revenue for FI30? Like, I'm not looking for any specific guidance, but just trying to understand the benefits from your side. So, what will work for us? What is working for us? So, this is the question.

Yeah. So, Mr. Gupta, yeah, as I mentioned, the tailwinds are extremely strong, and we have seen the strength of our execution capability in the results that got delivered during H1. And we therefore are expecting this trend to continue for H2, and we will outperform for the full year as well.

As I mentioned,

it's going to be same in line with what we delivered in H1.

Okay, sir. Thank you so much.

Thank you.

The next question is from the line of Hridesh Gandhi from Discovery Financial Services Private Limited. Please go ahead.

Hi, sir. I just had a couple of questions. One was, you know, as the price of lab grown continues to go down, you know, our percentage of the cost of the overall diamond is actually increasing. Is there some particular point at which there's going to be a pushback on, do we really need certifications for, you know, something that's not really all that expensive?

Yeah, I think you should refer back to our Investor Day deck. There are two or three aspects which were covered in that conference. Number one was the stability of the wholesale price over the last couple of years. It's settled in the 180 to 120 range. That was the articulation that we made in that presentation that day. Number two, the need for certification is driven by retail. And if you were to look at the certification cost as a percentage to what it retails at, this is between 2 to 3%. So from that context, we expect the business to continue with the current momentum. And I think we have addressed this in the past in terms of where this business is headed, etc. Given the fact that significant capacity is getting added, and stability in the wholesale prices, we expect that the business is going to continue on a strong wicket for the forthcoming quarters.

But see, you don't... Okay. And the other question was that in terms of, you know, just looking at a few standard checks I did across the industry, you know, is that how important is our brand? And then, just want to understand, what is driving ours such a strong, you know, dominant market share here? And is there a risk of a new player actually entering in here, offering it at a much lower cost, and then just become, you know, acceptable?

I wish that was as simple as, as you stated, Ridesh.

It's simple, I'm just asking the reason behind the barriers to entry here, you know?

Yeah, there is an element of a first-mover advantage, which IGI has. We were the first to certify lab-grown diamonds. Number two is the fact that there is an element of trust and acceptance for a brand. That has got established over 50 years. These are the most of this business, and given these strengths that we have from a competitive landscape, We, you know, that's the reason why we lead in the segment that we are currently operating in.

Right. And then, you know, just thinking, again, this is for my own understanding, is that, look, when we speak to people in the industry, obviously, when it comes to, let's say, like, natural people, you know, do LUTGIA, I mean, actually, a lot. And when it comes to LGD, obviously, you know, people are going to you primarily. Sorry to interrupt. Sorry to interrupt.

Mr. Gandhi, due to time restrictions, please come back in the question queue for more follow-up questions.

Okay, okay.

The next line, the next question is from the line of Rajesh Jain from RK Capital. Please go ahead.

Yeah, thanks, sir, and congrats on a very strong set of numbers. My question is on the nature of the lab-grown diamond certification. So, your competitor, GIA, has moved away from the traditional forces reporting for lab-grown diamonds towards the simplified premium or standard classification kind of reporting, right? So, what does your company see as the likely long-term market preference? Will the market opt for simplified classification or the detailed rating reports that you provide? And are customers willing to pay a premium for the detailed certification or will they opt for the lower-cost simplified certification?

Okay, Rajesh, this is a long drawn-out answer. Let me see how crisp I can be. There are a couple of elements that we need to understand as to the need for certification. One, the four C's establish the commercial value at which these goods get traded across the value chain. The specific color, the specific clarity, the cut, and the carat weight. These determine the commercial value at which these stones get traded, number one. Number two is unless that sort of clarity is available to the consumer, he doesn't understand what he is buying. That is the reason the four C's have been established and been prevalent for the last 70 or 80 years. That is the foundation on which the diamonds are certified, and there is an acceptance for that certificate. It's not going to go away at all. And as an independent third-party authenticator, we continue to believe that the four C's are a critical element to determine the quality of the diamond.

Okay. So, you are not seeing any traction towards or any demand for the simplified classification. Rather, you are seeing strong traction for the four C's based reporting.

You are right.

Okay, fine. Two more short questions. So, just wanted to understand the meaning of your sentence when you say H2 will be similar to H1 growth rate, and I have seen that the H1 growth rate has been closer to 27% in terms of revenue growth. So, on the full year basis, can we expect 25% revenue growth plus minus 2%? I just wanted to be clear whether I understood your sentence correctly.

Okay, Ragesh, as I have articulated on the call, there are significant tailwinds for the business, there is significant capacity that is being added, and as we get into this festive season, our performance for October continues to be rock solid, and that is the reason why we are saying that we expect to outperform for the full year, similar to what we delivered in H1.

Okay, so you would not like to call out a number like 25%, but you are just saying that it will be out-performance, basically, and it will be similar to Aspen Growth Rate. Sir, last question. Are you seeing more demand from the large chain stores, or you are also seeing demand from individual jewelry stores going for LGT certification, specifically for LGT certification?

And is the growth in end-cursion? Sorry to interrupt this, Jain. Due to time conditions, kindly come back in the question queue for more follow-up questions. The next question is from the line of Rajesh Shah from BTS Capital. Please go ahead.

From next, we're on a strong set of numbers. So, my first question is that our ASP grew despite a strong growth in both lab-grown diamond jewelry as well as blue stones. So, is there an element of prices starting to grow for lab-grown diamonds now? Is that the reason behind the ASP growth overall? And my second question would be around the market.

One question at a time. I just one question at a time. Your first question comes kind of like here. I didn't know.

Yeah. So, our ASP grew despite a very strong lab-grown diamond jewelry as well as blue stone growth. So, just wanted to understand, are prices for lab-grown diamonds starting to grow up now? That was my first question.

Okay. So, Rajesh, as I have just spoken to all of you all on the call, the ARP for the quarter is up 4%. 2% of that growth came from AGM. The balance 2% came from the base business, driven by a higher LGD mix. If you were to look at the LGD mix for this quarter, it was 54% versus 52%. That is the key driver for an effectively 2% increase in the ARP if you were to discount the AGL consolidation.

Got it.

My second question was around the marketplace. Mr. Sharp, due to time concerns, can we come back in the question queue for more follow-up questions? Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to one for participants. The next question is from the line of Sanya Jen from KPMS. Please go ahead.

Thank you for the opportunity and congratulations on the good set of numbers. Just one question to understand more on the industry dynamics. With the rise of AI, how has the competitive landscape for IGL changed? So, basically, can modern labs now use AI to enter the field easily and offer the similar testing and analytical services that IGL offers, but at a lower cost? So, just wanted to understand that bit.

Okay, Sanya. From an AI-ML standpoint, the critical aspect is how do you build capability from a machine learning standpoint. The machine learning happens through the images that we capture in the lab and feed it to the machine for it to start interpreting the results, which is otherwise given by humans. That sort of expertise is with IGI. We have been certifying, as you said, some four and a half million certificates is what we issued during this quarter, right? So, that sort of data fits not with everybody across the globe. IGI is in the unique position to have this sort of images, etc., which can be therefore leveraged for machine learning, and therefore introduction of AI into our processes to basically improve our productivity around turnaround times, etc. And that is the end of year we are working on. Okay, good. Thank you.

Thank you. The next question is from the line of Rohan from Dexor Capital. Please go ahead.

Yeah, hi. Thanks for taking my question. I just have one question. To the average realization, it fell 12% on quarter-on-quarter basis, and like the presentation attributes it to, you know, 4% fall in the LGD loose cones. Can you please help me explain the mechanism because it's a bit counter-intuitive for me. I think the LGD certification should

cost lower than the natural lemon certification. If you can help me understand the mechanism, it will be really helpful. Jaron, what we are talking here is from a revenue mix standpoint and not a cost standpoint. The mix for the quarter was 4% lower and the jewelry mix 3 or 4%. If you were to combine both natural diamond jewellery and LG jewellery, this is the trend that we normally see during this quarter, which is quarter 2, quarter 3, given the fact that we are entering a festive season. So that is the context in which you must look at this 12% decline on ARP from a sequential quarter standpoint.

You got it. Thank you.

Thank you. The next question is from the line of Janarshit from Auriga Capital Advisors, LLP. Please go ahead.

Good evening. Congrats on the set of numbers. Sir, I just require a couple of clarifications. Is it true that, you know, we have given rights to the last top five LGD manufacturers in Surat, the right for printing certificates?

Can I just repeat your question?

Yes. What I'm asking is that have we given printing certificate rights to the large five lab-grown diamond manufacturers in Surab?

No, Jhinam. We haven't given any rights to anybody to print our certificates.

Okay, fine. And my second clarification is that I do pick up from speaking with multiple diamond and NGE guys in the business That there is grading inconsistency in regards to when it comes to IGI certification. Can you clarify on the thing?

As we have articulated in the past, the grading is a subjective element. From the four C's that we grade as far as the diamond is concerned, apart from the carrot weight, which is an objective analysis, the other three aspects are subjective. However, given the way our organization is structured, depending on the size of the stone, etc., there are multiple pairs of eyes which go before a final certificate is issued. It is not that a single grader can gauge a stone and a certificate gets printed. We are an ISO accredited organization. There are strong internal processes that have been built over the last 50 years of our existence. So, there is multiple layers of check before a final stone passes our system and its certificate is issued. So, from that context, we remain extremely confident on the capabilities and the processes that we run within the organization to deliver consistency of grading results across all our businesses.

Can I pipe in now? Can you guys hear me?

Yes, sir.

Yeah, I've been trying to get in, but I don't know, somehow. Anyway, see, the thing is, at At IGI, we are the only laboratory which has been certified by ISO for the last 18 years. Now, ISO has a very stringent accreditation process where they govern the entire process as well as the technical ability. We also get certified by RJC, which is responsible jeweler council worldwide, and they look into the social aspects of our business. So, both of these, we are the only laboratory to have defined the entire process, and furthermore, see, where Labron is concerned, we are the only laboratory in the world to acknowledge it as a diamond, because both are exactly the same. And natural diamond is earth-mined, laboratory diamond is man-made, but both are diamonds. And we, as a principal, being a third-party, independent certification body, we emphasize that we will grade diamonds and we will keep to our integrity. We will not lesser the diamond, like lab-grown, to something which is mundane. It is less expensive than natural diamonds, but it is still an affordable luxury, and there are consumers in the world who would love, have the desire to have diamond, and today Labyrinth gives them the opportunity to buy a diamond, and which is also certified by IGI. So, IGI stands its ground that we will certify all gemstones and diamonds and give the origin of the diamond. And, of course, in the diamond business, we will give the four Cs, which is an age-old, 100-year-old certification criteria, which has been given to the world. So, at IGI, we will give the 4Cs, we will give it to Origin, and that is what we have placed our integrity and the trust to defend for the consumers.

I really appreciate your answers. To that extent, GI is the leader in U.S. and Europe. They recently let go of the 4Cs process. Isn't it true? And they being so large, and we are literally a small scale of their, I mean, I just kind of wonder that, you know, US, Europe being so large, and GIA and the HRD, you know, so somewhere I heard that, you know, our grading compared to them, there is a gap. And then why, so it's only, so yeah, just some comments on that.

Yeah, no, there is no gap. In fact, we are consistently drawing a straight line across the process. And I would say that because of the humongous quantities that we certify, we get into the AI and ML mode, and more and more accurate results are being given to the consumer, to the consuming world.

Great. Thank you so much for your detailed answers. Thank you.

Thank you. The next question is from the line of, alias Garshakir, from Motilal Ospal Mutual Fund. Please go ahead.

Yeah, thanks for the pleasure. Hi, Ishmael and Tamas. So, I don't know if my question has already been asked. I'm sorry I joined a little late. I just wanted to, you know, I mean, check on the guidance. So, you know, we had earlier given the guidance of IT's, you know, revenue growth and, you know, EBITDA PAD growth. Now, H1 has been almost one and a half times of what you had guided, and in fact EBITDA and PAD have been almost two to two times of the growth that you had guided. So, if you can just, you know, share some color in terms of what you should expect for, you know, H2, if you hold your guidance, then, you know, H2 can be significantly lower or you think that, You know that guidance will be updated.

Okay, Ali, I think you have joined the call a little late.

Yes, I am joined a little late.

So, we have addressed this to a couple of participants. Yes, you are right. We have obviously over-delivered versus whatever was our initial estimate. And this is obviously driven by some significant tailwinds that we have seen in the industry. Some of this was articulated during the investor call as well, where we have spoken about significant capacity additions, etc. happening. In this segment, that is enabling us to therefore look, see these numbers the way they are panning out. And given the fact that we have such a strong H1 performance, we are upping our guidance to say that we expect to keep outperforming for the full year in line with the performance for H1.

Thank you. This is very helpful and sorry for repeating that question. Thank you.

Thank you. The next question is from the line of Devya Dhaka from VGSPL.

Please go ahead. Please go ahead with a question. Ms. Dhaka, please unmute yourself.

If there is no response, we move on to the next participant. The next question is from the line of Ankaj from Avis Capital. Please go ahead.

Good evening, and congratulations to the entire team for a strong fight. We saw our death and India's better percentage. So, what is the EBITDA margin we are expecting on a steady-state business? That's one. And second is on the India dip, which we saw, and you explained that this is... So, when are we actually expecting the results to come out of those investments?

First question is, first, in terms of the overall EBITDA margin. Is that the question? I hope I got it right. That's right. The business delivered 60.1% EBITDA margin for the financial year 25-26. First quarter, we delivered 60.4% and in this quarter, we have delivered 61.4%. This business, as we have articulated in the past, has operating leverages, which translates to an EBITDA growth, which normally is faster than the revenue growth. We expect that trend to continue.

And on the idea of...

Good evening, sir. Congratulations on the good set of numbers. My question is from the margin side. How does it differ between your India and international business and how much of this is organic versus the acquisition part of it, if you could quantify this on average?

We look at our business as a combination of two factors. One is that the manufacturing base is here in India. Therefore, we see a huge leverage that happens for the India operations. But the largest retail chains are in the West. That is the reason in the past, and as we also evolve as an organization, we are talking about the strength of the industry. And IGI, which is the manufacturing strength, coupled with the retail strength of the other geographies, giving us the edge as far as the totality of the business is concerned. And that is the reason why we have always articulated, please do not look at these numbers in isolation, because the demand comes in from the Western market. We are the suppliers to the world. The entire ecosystem as far as lab-grown business is concerned rests in India. The entire grading process also rests in India. So that is the reason I would in the way to ask everyone to look at these numbers in its totality.

Understood, sir. Thank you very much. And if I may add up another question we have discussed in the previous quarter about expansion of AGL beyond the risk. In which geographies are we particularly targeting, sir?

Saimash, would you want to answer that question?

Yeah, no sweat. See, AGL has excellent expertise in the colorstone analysis, and IGI has a global reach. So, what we plan to do is to extend AGL services to the other parts of the globe. It can be, I mean, we are already looking into different territories where we are expanding. But currently, I would not really like to expose where exactly we are going to open up. But we have a plan which will take AGL to the global level.

Thank you, sir. All the way it is.

As there are no further questions from the participants, I now hand the conference over to the management for closing comments.

Thomas, would you want to give some closing comments or do you want me to take it? Just take it. Okay, so thanks, everyone. Thanks for taking the time. And we hope that we have answered the questions that's been running around in your mind. In case you have any further follow-up questions, we are just one phone call away. We appreciate your patience, and thank you very much for the time.

Thank you. On behalf of International Demological Institute Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your links.