International Gemmological Institute IPO: A New Investment Opportunity
The much-anticipated initial public offering (IPO) of the International Gemmological Institute (IGI) has officially opened for subscription today, marking a significant milestone for the company and potential investors alike. With a total issue size of Rs 4,225 crore, this IPO comprises a combination of fresh equity sales and an offer for sale (OFS). Investors have until December 17 to place their bids, and the initial response has been promising, with the issue subscribed at 17% by the close of the first day.
Subscription Details
The retail category has shown the most enthusiasm, with a subscription rate of 70%. Non-institutional investors followed with a 14% subscription rate, while institutional investors have yet to place any bids. This initial interest from retail investors suggests a strong belief in the company’s potential and market position.
Utilization of Funds
The funds raised from this IPO will primarily be directed towards acquiring the IGI Belgium Group and IGI Netherlands Group, thereby consolidating global operations under the IGI brand. The remaining proceeds will be allocated for general corporate purposes, which may include expansion initiatives and operational enhancements.
Price Band and Lot Size
The company has set a price band of Rs 397-417 per share, allowing investors to bid for a minimum of 35 shares in one lot, with the option to bid in multiples thereafter. This pricing strategy aims to attract a wide range of investors, from retail to institutional.
Grey Market Premium (GMP)
Ahead of the IPO, the International Gemmological Institute has been trading at a grey market premium (GMP) of approximately Rs 85, indicating a 20% premium over the upper end of the issue price. This positive sentiment in the grey market reflects investor confidence and could bode well for the stock’s performance post-listing.
Analyst Recommendations
Market analysts have generally advised investors to subscribe to the IPO, citing IGI’s strong reputation in the certification and grading of diamonds, gemstones, and jewelry. The company holds a leadership position in the global market and has demonstrated consistent growth in its financial metrics.
However, it’s worth noting that the asking price translates to a price-to-earnings (P/E) ratio of 82.90 based on FY25 annualized earnings and a P/E of 110.90 based on FY24 earnings. This suggests that the issue may be fully priced, which investors should consider when making their decisions. Swastika Investmart has characterized the IPO as suitable for those seeking both listing gains and long-term growth potential.
About the International Gemmological Institute
The International Gemmological Institute is part of the globally recognized IGI Group, which specializes in the certification of natural diamonds, lab-grown diamonds, jewelry, and colored stones. Additionally, IGI offers gemology education, further solidifying its position in the industry. In India, IGI commands a 50% market share in certification volumes and operates 19 labs across the country, along with one in Türkiye, making it the largest network among its peers globally.
According to the Redseer Report, IGI is the second-largest independent certification provider worldwide, holding a 33% market share in diamond and jewelry certifications as of 2023. For the nine months ending September 2024, IGI India reported revenue of Rs 788.16 crore and a net profit of Rs 316.83 crore, slightly lower than the previous year, indicating a need for strategic growth initiatives.
IPO Timeline
The International Gemmological Institute IPO is open for public subscription from December 13 to December 17. The allotment of shares is expected to be finalized on December 18, with the listing of shares scheduled for December 20.
Conclusion
The IPO of the International Gemmological Institute presents an intriguing opportunity for investors looking to enter the growing market of gemstone certification. With strong backing, a solid market position, and a clear plan for utilizing the raised funds, IGI is poised for potential growth. However, as with any investment, careful consideration of the pricing and market conditions is essential.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own and do not represent the views of The Economic Times.)