International Gemmological Institute (IGI) has been serving the gem and jewelry industry since 1975, offering services in diamond grading, gemstone certification, education, and appraisals. With its rich history and global market leadership, IGI holds a significant position in the diamond certification space, currently commanding a 33% market share based on the number of certifications conducted in 2023. The company operates under the brand name "IGI" and has an extensive network of certification labs worldwide.

IGI India, the Indian arm of the global organization, is preparing for a large-scale public offering through its IPO, aiming to raise ₹4,225 crores. This will consist of both a fresh issue and an offer for sale (OFS).

IPO Details

• Issue Type: Book-built issue
• IPO Size: ₹4,225 crores
  • Fresh Issue: ₹1,475 crores (353.71 Lakh shares)
  • Offer for Sale: ₹2,750 crores (659.47 Lakh shares)
• Price Band: ₹397 to ₹417 per share
• Market Capitalization: ₹18,020.85 crores at the upper price band
• Lot Size: 35 shares
  • Retail Minimum Investment: ₹14,595
  • HNIs Minimum Investment: ₹2,04,330 (14 lots)
• Subscription Period: December 13, 2024 - December 17, 2024
• Allotment Date: December 18, 2024
• Listing Date: December 20, 2024

GMP (Grey Market Premium) and IPO Performance

The Grey Market Premium (GMP) for IGI India IPO is showing promising trends with a current estimate of ₹85, reflecting potential listing gains of 20.28% based on the IPO price of ₹417 per share. This indicates a strong demand in the unorganized market, although trading based on GMP is not recommended for making informed investment decisions. The listing price might differ based on the overall demand during the subscription period.

Day-Wise GMP Trend:

• Date: 12 December 2024
• IPO Price: ₹417
• Expected Listing Price: ₹445
• GMP: ₹85 (20.28%)

This positive GMP reflects strong investor interest and could point to favorable listing gains once the shares hit the market.

Subscription and Allotment Status

As of December 13, 2024, the subscription status shows that the IPO has been subscribed 0.04 times on its first day. This indicates a slow start, but the subscription status is likely to pick up momentum as the IPO progresses. The allotment process will be conducted by KFin Technologies Limited, and investors can check the allotment status through the registrar’s website by entering their PAN number or application number.

Objectives of the IPO

The funds raised through this IPO will be used for:

• Acquisition of IGI Belgium Group and IGI Netherlands Group: ₹1,475 crores will be allocated towards the purchase consideration for acquiring these international units from the company’s promoters.
• General Corporate Purposes: The remainder of the funds will be utilized for expanding the company’s operations and meeting working capital requirements.

Financial Performance and Valuation

IGI India's financial performance for the last few years shows a steady growth trajectory:

• Revenue: ₹6,194.92 million for the nine months ended September 30, 2024, with consistent growth in previous years.
• EBITDA: ₹4,523.17 million for FY 2024, reflecting a solid margin.
• Profit after Tax: ₹3,260.60 million for the same period, indicating strong profitability.

The pre-issue P/E ratio of 50.98 and the post-issue P/E ratio of 58.20 suggest that the IPO is fairly priced relative to the industry, considering the company’s strong revenue growth and high return ratios:

• ROCE (Return on Capital Employed) for 9MFY24: 62.19%
• RoE (Return on Equity) for 9MFY24: 56.59%

These performance metrics highlight IGI India's robust business model and leadership in the industry, making the IPO attractive for investors seeking exposure to the gem and jewelry certification sector.

Investment Recommendation

Given the company's solid market presence, strong financials, and promising IPO valuation, the International Gemmological Institute (India) IPO appears to be a good opportunity for risky investors. The expected listing gain of 20.28% based on GMP and IGI's dominant position in the global gem certification market makes it an appealing option for those willing to take on some risk for potential returns.

Investors looking for long-term growth and exposure to the gem and jewelry sector should consider subscribing to the IPO, particularly if they are confident in the continued demand for certification and grading services.

Conclusion

The International Gemmological Institute (India) IPO offers an exciting investment opportunity for those looking to capitalize on the booming global gem and jewelry market. With strong financial metrics, a robust brand presence, and an attractive listing gain potential, IGI India stands poised to make a successful debut on the stock exchanges. However, investors should evaluate the IPO's risk-reward profile carefully before making their final decision.