Ladies and gentlemen, good day and welcome to the Q1 CY 2025 earnings conference call of International Gemological Institute India Limited, hosted by MUFG Intime. 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 by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sumeet Khaitan from MUFG Intime. Thank you, and over to you, sir.
Yeah, thank you, Alrik. Good evening, everyone. I welcome you all to the earnings conference call to discuss Q1 CY 2025 results of IGI India Limited. To discuss the result, we have from the management, Mr. Tehmasp Printer, MD and CEO, and Mr. Eashwar Iyer, CFO. They will take you through the results and the business performance, after which we will proceed for question-and-answer 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 the investor presentation and the 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. Thank you, and over to you, sir.
Thank you, Sumeet. Good evening, ladies and gentlemen. I would like to welcome you all to the Q1 CY 2025 earnings call. I trust that every one of you had a chance to review our financial results and investor presentations, which have been made available on both the stock exchanges and as well as our company website. It's a pleasure to connect with you all and share insights into our business strategies and outlook. To recap, we are the largest independent accreditation and certification service provider in India, with over 50% of the market share. Globally, we are the second largest player with 33% market share, and in the lab-grown sector, we are leading with 65% of these lab-grown certified diamonds by IGI.
We serve nine out of 10 jewelry chains in India, and we expect to continue to leverage this position to expand our global presence and establish IGI as a laboratory of choice to the large retailers and brands. We are present across 10 countries globally and have 31 labs, 12 in-factory laboratory setups, and 18 schools of gemology. We serve over 7,500 customers globally and are present across the jewelry value chain. Our multiple service delivery formats, in the form of IGI labs, in-factory labs, and mobile labs, strengthen our customer relationships, driving a distinct advantage for the company. Our schools of gemology provide us with distinct advantage as they help us drive brand awareness, expand market opportunities, and new customer acquisitions.
I'm happy to report that the company has shown strong growth momentum across all its business segments compared to the previous quarter as well as the first quarter of the last financial year. The business, on a consolidated basis, has been done exceptionally well, with 15% growth in revenues and 29% growth in EBITDA compared to the previous quarter. The growth in revenues was driven by our core segments of natural diamonds as well as lab-grown diamonds, each recording more than 30% revenue growth in this quarter compared to the previous quarter. The jewelry segment also has registered single-digit revenue growth, owing to the base effect of last quarter, which witnessed a high festive demand in India. On a year-on-year basis, the business has delivered revenue growth of 10% and EBITDA growth of 13% in Q1 2025 when compared to Q1 2024.
Reported volumes over this period grew by 27% across our business segments: natural diamonds, lab-grown diamonds, jewelry, and colored stones. We took a one-time price correction in our LGD certification services in Q2 last year, corresponding to the drop in the wholesale prices of the lab-grown diamonds. Post that, certification prices have stabilized over the last three quarters. Going forward, we are expecting robust demand to continue both across natural diamonds as well as lab-grown diamonds. Further, with demand for jewelry certification also on the rise, we expect the jewelry segment to drive a significant proportion of growth in the quarters to come. Finally, with increasing adoption of lab-grown diamond jewelry in India, we expect the revenue from this segment also to increase significantly in the future.
With the industry evolving at a rapid pace and certification being a key enabler of consumer trust, IGI is focused on strengthening its leadership position by expanding its presence, embracing innovations, and enhancing the overall customer experience. As demand for both natural as well as lab-grown continues to grow, IGI is strategically positioning itself to capture the immense opportunities which lie ahead. We are rapidly ramping up our people and laboratory infrastructure to support this volume growth. In Q1 2025 itself, India business has recruited over 130 gemologists. This virtually represents around 14% of our overall employee strength to cater to the exponential volume growth. This is part of our broader strategy to remain agile, responsive to the evolving needs of our partners.
The company is also embarking on a digital transformation initiative as we seek to enhance the quality of our service as well as reduce the turnaround time of our services. Overall, we are confident of maintaining the growth momentum and delivering revenue and EBITDA growth this year in line with our historical performance. In terms of industry outlook, we have started 2025 against a backdrop of significant dynamic global developments. On a macroeconomic front, trade policy changes, including the recent imposition of tariffs by the United States, are being closely watched and evaluated by the diamond and jewelry industry. The 90-day pause has provided the industry time to evaluate the impact of the potential tariffs and identify strategies in the evolving landscape. The India-U.S. FTA is also being closely followed, and we are assessing the impact of these changes in our business.
We remain committed to enabling growth for our partners and delivering long-term value to all our stakeholders. With that, I now invite our CFO, Mr. Eashwar Iyer, to take you through the financials and operational performance for the quarter. Over to Eashwar.
Thank you. Thank you, Tehmasp. And good evening, everyone. And thanks for joining today's conference call. We are delighted, as always, to have each of you with us. As many of you would know, our company follows a January to December reporting cycle, and we are excited to present the results for the first quarter of the calendar year 2025. I will start my update with the performance update versus the previous quarter, which is quarter four 2024. I am happy to report that the group consolidated business has maintained a strong growth momentum in quarter one 2025. In terms of revenue, certification income for the current quarter stood at INR 297 crores, growing at 20% compared to the previous quarter.
This was primarily driven by strong revenue growth across all our core segments, namely 37% growth in natural diamonds, 35% in lab-grown diamonds, 16% growth in lab-grown jewelry, and 14% growth in gemstones. Total revenue from operations for the quarter stood at INR 305 crores, registering a growth of 15% versus the previous quarter. In terms of reported volumes, during the quarter, we delivered 3.12 million reports compared to 2.77 million reports in quarter four 2024, registering a growth of 13%. Driven by strong revenue performance, continued cost optimization, and restructuring in some of the other global offices, we have delivered a PAT of INR 141 crores, marking a growth of 24% compared to the previous quarter. PAT margins have also expanded by 330 basis points to 46.2% for the quarter. EBITDA stood at INR 196 crores, reflecting a growth of 29% compared to the previous quarter.
EBITDA margins stood at 64.2%, which is an improvement by 680 basis points over the previous quarter. Coming to the year-on-year update on a consolidated group performance, I'm happy to report that the group consolidated business has also maintained strong growth momentum in quarter one 2025. During the quarter, we delivered 3.12 million reports compared to 2.47 million reports at the same time last year, marking a robust year-on-year growth of 27%. In terms of revenue from certification business, the income stood at INR 297 crores, growing at 11%. This was driven by strong growth across all our key segments, be it lab-grown diamonds growing 9%, ND jewelry growing 21%, LGD jewelry 87%, and gemstones growing 16%.
This revenue growth also reflects a one-time pricing correction in our lab-grown diamond certification services that was affected in quarter two 2024, post which the certification prices have remained stable over the last three quarters. Revenue from operations for the quarter stood at INR 305 crores, registering a growth of 10% year-on-year. Driven by strong revenue performance, continued cost optimization, and restructuring in some of the global offices, we have delivered a PAT of INR 141 crores, marking a year-on-year growth of 12%. PAT margins have also expanded by around 80 basis points and stand at 46.2% for the quarter. EBITDA stood at INR 196 crores, reflecting a year-on-year growth of 13%. EBITDA margins at 64%, representing a 180 basis points improvement over the same time last year. Looking ahead, the company is actively ramping up infrastructure to support volume growth, and we remain confident in delivering a very strong performance for 2025.
With that, I conclude my remarks and open the floor for questions. Thank you, everybody.
Thank you, sir. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone phone. If you wish to remove yourself from the question queue, you may press star and two. We will now wait for the question queue to assemble. The first question comes from the line of Jay Doshi from Kotak. Please go ahead.
Hi. Thanks for the opportunity, and thanks for reinstating segmental disclosures. Could you provide some guidance or outlook on what are revenue growth as well as EBITDA margin for CY 2025 for both consolidated and standalone businesses?
Okay. Hi, Jay. This is Eashwar. Okay. As I had mentioned, our revenues on a year-on-year basis have moved from 2.47 million reports to 3.12 million reports, registering a 27% growth. Overall, revenues from operations have grown 10%. And as we have discussed in the past, this is post the pricing correction that we did sometime in April, May of 2024, consequent to the correction of the lab-grown prices that we had seen from the last quarter of 2023 extending up to the quarter one of 2024. So from that standpoint, the company has now cycled close to cycling the price correction that happened as far as the LGD certification prices are concerned.
Again, if you were to refer to the sequential growth that was indicated during the call, the gap between the revenue growth and the volume growth should now subside as we now start cycling the pricing that correction that happened last year. From that context, I think we should therefore expect to grow between 15% and 20% from a revenue standpoint in this financial year at the consolidated level. And the same performance is therefore, yeah, sorry.
Sure. Please continue. Please complete.
Yeah, so I'm saying that was the view from a consolidated standpoint, and I think it will more or less mirror in terms of what the India business will therefore perform. With India representing over 75% of the group's revenues, I think the performance in India will therefore mirror the consolidated group performance as well.
Sure. And could you provide some color or outlook on margin guidance, EBITDA margin, consolidated level?
Yeah. See, I think we delivered around 57% PAT margins last year for the full year 2024. The quarter one performance has seen substantial improvements in margins. While the company is continuing to invest significantly in terms of building up or ramping up capabilities from a people and a laboratory expansion standpoint, we are confident that with the volume throughput that is coming through, we should therefore improve on whatever we delivered last year. So anything between 57% and 64% is what we think we will deliver from a PAT margin standpoint for the full year this year.
Perfect. That's helpful. A couple of associated questions. One is, if the mix of jewelry increases significantly in certification volumes going forward, does it have any implications on profitability? Because we understand that realizations for jewelry certification is much lower, but we are not sure how EBITDA margin is for jewelry certification.
See, Jay, I think over the last four quarters, if I were to look at the quarter one of 2024, the total jewelry business as a percentage mix was around 23%-24%. That 24% has actually now moved up to around 28%. And despite all of that, you're seeing the improvement from a margin standpoint. But having said that, this trend is of importance for all of us to understand because most of this increase in the revenue mix is driven by lab-grown jewelry segment. As more and more consumers in India start participating in the lab-grown jewelry segment, I think this is a massive potential for the organization to therefore accelerate its growth in the forthcoming years.
So that is the big plus that we are seeing as a trend within our organization in terms of more consumers coming into the fray as far as lab-grown jewelry is concerned. So despite the 4%-5% mix improvement on jewelry, the margins have obviously continued to remain strong.
Understood. One final one. You mentioned that certification prices have been stable over the past three quarters. Can you give us some color on realization for LGD? Sorry, my question is related to LGD. Realizations over the past three quarters? Because there are two things we often sort of hear when we talk to people in the industry. One is full certification versus minimum certification. What are the trends? And second is stone size, average caratage, whether it is going up on average per certificate for LGD. So broadly, if you can give us some color on this trend over the last three, four quarters.
So where LG is concerned, right now, the wholesale price of lab-grown diamonds has stabilized, and as well as our certification price is also stable. What happens is, earlier, we used to certify 30 pointers. Today, we are certifying 2 carat+ . So the size of the diamond has obviously increased. So whereby with the size of the diamond, we base our pricing on the unit weight of the diamond. So that is why the realization from certifying a larger diamond is better than certifying a smaller diamond. That's one. Having said that, with the advent of LG jewelry certification, LG jewelry is also growing up very rapidly. And all the smaller diamonds which were not certified get cluster certification in a jewelry-mounted piece. So again, certification of the smaller diamonds also is being done in case of bi-certification of jewelry piece.
These are the two things that we feel that will ramp up the revenues in the LG sector.
Understood. Just when you certify stones, are there two sort of different brackets where full certification and minimum certification at a stone level for those stones?
No. See, what happens is we have different formats. We have a Full Diamond Report. We have a Dossier Report. We have a Credit Card Report. The analysis remains the same. Only the format in which it is displayed to the end consumer or to the retailer is different. It depends on their convenience. Some prefer the credit card format. Some prefer the smaller diamond format. Some prefer the full-scale report. It depends on an individual retailer preference. So we cater to all of these demands, and we certify accordingly. But however, having said that, the analysis remains the same.
Understood. So pricing remains the same, which is linked to the carat and the size of the diamond and not the format?
Yeah. The pricing is more linked to the size of the diamond, the weight of the diamond, rather. And yes, it is like that.
Sure. Thank you so much. I'll get back in the queue.
Thank you.
Thank you. The next question comes from the line of Anand Shah from Axis Capital. Please go ahead.
Yeah. Hi. Thanks for the opportunity. Just a few questions. So firstly, I mean, while it's early days, but because of all these tariff changes, any indication you can give on any disruption you've seen or are likely to see maybe in the next three to six months? And does this China tariff angle in any way sort of benefit you?
See, the tariff is a big disruptor globally. There is no doubt about that. And it is something that we will have to accept and adopt. We have been given a 90-day lead period to find different innovation solutions, and 10% would probably become a norm where the tariffs are concerned. Now, from an IGI perspective, almost 50% of what we certify is for domestic consumption. And the same thing, it's like India to India. So the tariff is not a factor here. As well as China contributes 10% to the overall IGI revenues. And in China also, it is again China to China. You understand? So I mean, almost 60% in the overall mix is consumed domestically. Okay. Having said that, and then when you take the lab-growns, and we are the leading factors in lab-grown, a tariff of 10%, and we are a service organization.
We are not a product organization. So tariffs on services are correspondingly impacting less. And the value of the lab-growns in the wholesale level is low. And probably the incremental cost to the retailer and finally to the consumer would be, I think, distributed between the manufacturer, the retailer, and the end consumer. So I think it will be driven through all the—I mean, some may take the manufacturer may take a more portion of the hit, but it will be between these three. You understand what I'm saying? And that way, we will encounter the tariff challenge that we have in the current state.
Got it. Very clear. But I mean, in the near term, is there any disruption at all? Like you do make it impacted because of uncertainties. Are you seeing any of those, or that is not a concern?
We haven't seen anything.
We haven't seen anything. The numbers are increasing.
Got it. Got it. Got it. My second question was on this LGD jewelry. So this is pure play LGD jewelry growing in India, right?
Yeah. See, what happens is 95% of the diamonds are cut and polished in India. India is the main manufacturing hub of the world. You understand? So all that is done in India.
Yeah. No, I'm saying, I mean, we are seeing this sort of a significant growth pickup, as you've been highlighting as well, in the lab-grown jewelry now. So your lab-grown jewelry certification is all India-led lab-grown jewelry, right? This is end consumption in India.
Correct. You're correct to assume that.
Got it. And would it be fair to say that lab-grown jewelry certification will be higher ASP than the normal natural jewelry certification?
Again, that's dependent on the size of the stone.
It depends on the size of the caratage of the jewelry piece.
Okay. Okay. Got it. Got it. Got it. Okay. And one more follow-up question I had was, if I look at your international numbers, right? I mean, we look at consolidated minus standalone to derive these subsidiary numbers. There again, margins consistently have improved. I mean, even this quarter, if I see now, it's gone up from 13%-14% EBITDA margin to almost 20%. So what kind of margin are you now seeing in Belgium and Netherlands entities? And where should we project? I mean, Netherlands has already gone to 25%+ . Belgium, of course, had slipped into losses and is starting to recover. So some guidance on the trajectory on where these two entities should stabilize in margins?
Yeah. Again, Anand, I think as we have discussed in the past, there are significant strategic interventions that we have made in each of our key geographies across the globe. Okay. Early days, but the initial first quarter trends are extremely positive and give us a lot of confidence that this should progress in the strategic direction that we have set them up for.
Got it. But now with these kind of 15%-20% EBITDA margin, both Netherlands and Belgium sort of combined, that is sort of sustainable.
That's right.
Got it. Got it. Got it. Broadly. Okay. Yeah. I mean, these are the broader questions for me. Thank you. And one last thing, I mean, on disclosures, I mean, thanks for the segmental. Is it at all possible to share the CY 2024 numbers similarly? I mean, for the full year, the CY 2024 that you reported.
We can consider that, Anand. We'll come back.
Okay. Sure. Thank you.
Participants, please restrict yourselves to two questions. For any more questions, you may rejoin the queue. The next question comes from the line of Harit Kapoor from Investec. Please go ahead.
Yeah. Hi. Good evening. So just two questions. So you know historically, over the last few years, we've seen the natural diamond jewelry business in India not grow at a very fast pace. But you started to see a pickup there as well. So is that just broadly indicative of the market context right now where the natural diamond jewelry growth has picked up in the Indian market? Is that the way to think about it?
See, where jewelry certification is concerned, lab-grown is gaining traction. Okay. So when you—I mean, I'm not saying it's all due to lab-grown. Some of it is due to the natural jewelry certification, and quite a lot is also due to lab-grown jewelry segment.
Yeah. I get that. Just that this quarter, you've seen on the standalone business, even the natural diamond jewelry growth has been on a year-over-year basis, actually has been quite strong. So I just wanted to kind of get, is there a base issue, or are we just seeing now pretty good growth on the natural diamond jewelry certification side as well, which was a little bit subdued in the past? Lab-grown jewelry, obviously, is a new kind of segment for you over the last two years.
Yeah.
No, I think if you look at it, be it natural diamond, which is natural diamond loose, or natural diamond jewelry, the momentum in India has been continuing quarter on quarter, so again, and there is an orchestrated strategy at play in terms of wanting to get into the natural diamond segment at a faster scale than what we have done in the past, so there is adequate resourcing that is going towards, therefore, making some of these growth numbers happen.
Understood. You should be very clear. The second question was on just to understand seasonality in your business on the revenue side a little bit. So obviously, last quarter was a high-base quarter where you did about INR 280 crores. You have grown on that as well. So should we assume in general that Q1 2025 will be a higher revenue quarter in general, given that you have higher growth in the U.S. and good festive, etc.? Is that the way to think about it, or it typically should, Q1 last year was very high, and so this year, next four quarters, it will not be, there will not be too much seasonality. How do we kind of think about the revenue seasonality going into this year and onwards?
Yeah. Part of what you say is true, but there are a couple of other aspects that we must just keep in mind that if you were to look at it from a volume standpoint, and I'm just talking based on the data that I have for the last four quarters, from a volume standpoint, we've seemed to have a flat seasonality across quarters. What does that play? Obviously, is the slightly changing dynamics of mix across each of these segments. Because if you recollect the discussion that we had during the quarter four call, we had mentioned that the jewelry mix was pretty high given the fact that it was a Diwali festive quarter, right? And that's some of the mix change that you're seeing. If you look at the growth from the previous quarter, the mix of jewelry obviously has settled down to its normal levels.
The quarter one is being driven by the loose stone, both natural as well as lab-grown. You must just keep in mind that there could be a few tweaks on the mix across these segments as we go along quarter to quarter. From a total volume standpoint, we seem to be running a flat seasonal business across quarters.
Very clear. And then the last thing was, do we - if you think about tariffs and just to propose a hypothetical, if towards the end of the three-month window, is there a likelihood that industry pushes more cut polished into U.S. just to get away from that 10% tariff, which in turn just upfronts your revenue a little bit? Is there a possibility that that could happen, or it's too early to say?
See, it is too early to say because obviously, we're keeping an eye on even from the India-U.S. FTA that is being proposed. And the industry body here has a good sounding board with the ministry, etc. Because we must not forget that the gemstone jewelry export business is a very large part of the India export turnover. So I think you just keep an eye out for it. Let's see how this pans out.
Got it. Those are my questions. Thanks. All the best.
Thank you.
The next question comes from the line of Sheela Rathi from Morgan Stanley. Please go ahead.
Yeah. Thanks for taking my question. Hi, Tehmasp. Hi, Eashwar.
Hi, Sheela.
So my question was actually a follow-up to Harit's question on seasonality. Just want to understand how the seasonality differs between India and when we look at the consolidated revenues. Because if you look at the natural diamond growth, revenue growth, segmental growth this quarter for India is 51%, whereas in the US, it's about 1%. And likewise, in LGD, in India's case, we are down 19%, whereas for U.S., we are up about 88% on the jewelry side. Just want to understand how should we think of. I'm sure you talked about that last quarter in India's case was high on the jewelry side, natural diamond jewelry side.
So, just want to understand how should we think about the first half in India on a mixed point of view, as well as the first half on a consolidated basis, how the mix will be, and vis-à-vis how the second half could be?
Okay. I think what we can safely assume, and again, the industry trends are evolving because the lab-grown jewelry segment is just coming into play. But I think quarter two should mirror quarter one from a mixed standpoint, be it the consolidated business or from the India standalone standpoint. And obviously, quarter four, obviously, we should therefore expect a larger chunk going into the jewelry mix. But again, Sheela, I think at the moment, we are also looking at some of these trends, and with lab-grown jewelry really starting to take off, which is, as you mentioned, close to 100% growth, that has the potential to slightly skew the mix over what we've seen in the four quarters of last year. But Q2 should basically mirror Q1.
To add to what Eashwar is saying, see, lab-grown acceptance in the West, say U.S., is much more than the rest of the world. Most of the lab-growns have been exported to U.S., and that is why you see a ramp-up in certification of lab-growns in the U.S. India is more or less stable. When you are saying the 80%, what did you say? 88%?
88%. Yeah. Carry on your growth.
Yeah, but that is all lab-grown jewelry.
Lab-grown jewelry.
You understand? And lab-grown jewelry acceptance is much more in the U.S. The U.S. was the first continent to adopt lab-growns. And of course, IGI was the first certifying body to adopt lab-growns. So that is why we have the leadership status here.
Understood. Thank you. My second and final question is just on the international piece. If you could just give us more.
Sorry?
We lost you.
Sheela, are you there?
Fast. Like by China and Dubai.
I think, let us get back on the queue. I think we can.
Yeah. Can you hear me? Can you hear me?
Yeah. Yeah. Yeah. Yeah, Sheela.
Okay. Yeah. So Eashwar, the question is around the international growth for us. And we understand that Netherlands for us is doing better than Belgium. So if you could just give more granular details around what is driving the growth in the Netherlands business.
See, as I mentioned, we have the countries of China, Dubai, Israel, Thailand, Hong Kong as part of the Netherlands group, and we are seeing significant traction both in the China as well as the Dubai business, and that is what is driving the overall business from a Netherlands perspective.
Okay. Understood. All right. Thank you.
Thank you. The next question comes from the line of Gopal Nawandhar from SBI Life Insurance. Please go ahead.
Hi, sir. Am I audible?
Yes, you are, Gopal.
Thanks a lot for the opportunity, and thanks a lot for the detailed disclosures in the presentation, which will help us to analyze your company better. So my question was on this quarter, we have seen improvement in the overall average realized price quarter on quarter. Is this 839 a sustainable number for this year, or it will again change based on the revenue mix?
Yeah, Gopal. As I mentioned, there are, as we said, the overall seasonality from a total volume standpoint is consistent across quarters. But what you should probably anticipate for is a little bit of mixed variance that can happen across each of these quarters. So 889, to just draw context versus the previous. 889 was the performance for quarter four, and it's 950 this quarter, is driven by the fact that the mix of natural diamond loose stones as well as lab-grown loose stones have actually increased versus the previous quarter. And as I mentioned earlier, the quarter four mix on jewelry was higher versus quarter one of this year, driven by the fact that it was a festive Diwali quarter. So those aspects of seasonality within the overall mix or the overall revenue is something that you should keep in mind.
Okay. And, sir, is this quarter, the Q1 mix, a right representation of last calendar year? Or it will be significantly different in terms of mix in India?
See, these details are covered in the presentation as well. But for the interest of everybody, I'll just read it out. In quarter one of 2024, we had close to 73% of the mix from a revenue standpoint coming from the loose stone segment. That has moved down to 70%. So corresponding that 3%-4% increase has happened in jewelry, driven by lab-grown jewelry. So that is the trend that we are talking about in terms of the lab-grown jewelry starting to accelerate its growth across both India as well as the consolidated performance.
Okay. And sir, lastly, is it a right assumption to make that India growth will be faster than consolidated growth?
Yeah. At the moment, we are seeing India growth to be faster than the consolidated growth, given the fact that all of the lab-grown that is grown, the majority of that is getting cut and polished here in India. So from that context, we must expect the India performance or the India business to grow faster than the other territories or the other geographies.
When we say that the volume growth should mirror the revenue growth from, say, next, say, three quarters perspective, this year seen largely on LGD side, not on the overall company side.
Yeah. The LGD is also a big component of the overall revenue mix. And what we are saying is because of the pricing correction that we did in quarter one and quarter two of last year, we will start cycling that pricing come May and June of this year. Now, from that context is why we are saying that the revenue performance should therefore match the volume performance, which for the first quarter at least is lagging because of the pricing that we are cycling.
Thanks a lot for answering my question.
Thank you. The next question comes from the line of Alia sgar Shakir from Motilal Oswal Financial Services Limited. Please go ahead.
Yeah. Thanks for the opportunity. The question is actually on the tariffs. So my understanding is that some of the studied manufacturers have been indicating in the last few weeks there is some kind of a stalemate with the retailers in U.S. towards this tariff increase, and therefore there is some softness in demand from U.S. So just want to understand if you are observing any softness in business due to the tariff in the near term.
See, at the moment, at least as far as the first two, three weeks of April goes, we haven't seen any indication to the contrary versus what our performance has been for quarter one. So again, it's been the normal stuff that we've been running.
Okay. All right. Got it. This is quite useful. The other question is on the volumes. So given that we have seen very good volume growth in Q1, the only reason why the revenue impact was because of the one-time correction in prices that we have taken. So now that that is behind us and in the base, should we expect this strong volume growth to translate into revenue growth in the coming quarters?
Yes.
Hello?
Yes. Yes. We should expect that.
Got it. All right. Yeah. Those are my questions. Thank you so much.
Thank you. The next question comes from the line of Ashutosh Garud from Ambit Wealth PMS. Please go ahead.
Hi. Hi. Am I audible?
Yes, you are, Ashutosh.
I just wanted to check why did we just realize that pricing change we did two, three quarters back? Why did it happen? And second, why, I mean, will there be another round of pricing cuts, let's say, a few quarters down the line? So just your thoughts on that, and why did that kind of price change you had to do two, three quarters back? And why wouldn't it happen again?
Okay. I think from an industry context, the industry has seen pricing correction as far as lab-grown diamonds were concerned. This pricing correction started sometime in quarter four of 2023 and extended till quarter one 2024. Now, so that is the reason why we had to take the pricing correction in April, May to sync in with the market realities as far as lab-grown certification prices are concerned. Now, if you were to look at our document, which is our DRHP, we had actually done a bit of industry analysis to understand what could be the potential downside as far as pricing for lab-grown diamonds are concerned. And with the heavy CapEx and the OpEx model that these guys, the manufacturers, operate with at the $170-$200 of wholesale prices for lab-grown stones, we estimated that their ROIs is in the 8%-10% range.
That gives us confidence for the fact that there is not much elbow room now available for them to therefore drop prices further. Over the last three quarters, we are seeing a lot of stability on pricing as far as lab-grown stones are concerned, and correspondingly the certification charges that we charge. I think, based on that, I don't expect any major correction to therefore happen as far as lab-grown diamonds are concerned.
So it would be safe to assume that from Q3 onwards, your volume growth and revenue growth would mirror each other overall, I would say.
That's right.
Correct. Okay. Okay. Thank you. Thank you.
Thank you. The next question comes from the line of Chintan Sheth from Girik Capital. Please go ahead.
Yeah. Hi. Thank you for the opportunity. Are you all good?
Yes, you are, Chintan.
Yeah. Thank you. Thank you for the opportunity. And great setup from the Congress People Management. On the ramp-up part, you mentioned about on the resource addition and the infra capability improvement. If you can guide us in terms of how should one look at OpEx impact as well as CapEx impact in our balance sheet for the year or a couple of years? And any update on the ad spend? Because if you look at sequentially, our OpEx has been flat. You did mention about your international rationalization, of course. But if you can help us understand or segregate the marketing spend, how it has been incurred over this quarter, and what is the accrued benefit we can expect through the rationalization strategy which we are executing currently in the international business?
Chintan, what we are seeing is rapid growth in the volume. Okay. Now, take care of the volume. We have already taken steps, like I mentioned earlier, I think, in my commentary, that we have 130 gemologists which we have recruited and we are training. So that this takes care. I mean, it's an operational cost which we have to take, and the CapEx is minimal. You understand? It doesn't really affect much on the OpEx and CapEx. We are just beefing up our capacities and our ability. I mean, so our expertise remains the same. Our trust factor remains the same, and at the same time, if we are able to handle the volumes, the better turnaround times are given to the customer, and thereby, we have given better service to our customer. Better turnaround time means translate into money and more volume.
So we are taking all that into account to see that we continue our leadership status in the lab-grown sector.
Okay. And so the cost structure right now, which we have seen in Q1, on an absolute basis, do you feel that there will be hardly any inflationary apart from the inflationary impact, there will be hardly major increase one can expect? Or it will be steady state and the Q1 run rate on an absolute basis? Dollar basis?
See, Chintan, we will continue to do what is right for the business because as we speak, the recruitment on people, etc., is continuing. Because the paramount importance for us as an organization is to ensure five-star customer service. Okay? So that we have to recruit people to meet our customer expectations and also to meet the volume growth and the turnaround times, etc., we will continue to invest in the business. And as I mentioned, that is continuing as we speak.
Got it. And on the revenue front, if I may, on the volume growth which we have seen this quarter, 26% on group level. At India level, we have seen growth of 22% again. So what we are seeing, the guiding in terms of 15%-20% growth, bearing the first half impact due to the pricing, we are very confident about delivering about 20%+ growth on the volume side. That is what one can expect, right, given the optimism we have on the volume front.
Yeah. That continues to be the endeavor of the company to meet its strategic objectives for the next three to five years, Chintan.
Got it. Got it. And join back the queue, thank you. And thank you all very much.
Thank you.
Thank you so much. Ladies and gentlemen, in the interest of time, that would be the last question for today. I would now like to hand the conference over to the management for the closing comments.
Okay. So thanks, everyone, for the call. And obviously, we just have an hour for these calls. And if any of y'all have further questions, please reach out to us, and we shall be happy to answer any of your questions and give you proper clarifications, etc. So thanks for taking the time, and it's been a pleasure talking to each of y'all. Thank you very much.
Thank you, everybody.
Thank you. On behalf of International Gemological Institute India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.