Leading Diamond Stocks in the Indian Market

Traditional Diamond Market Under Pressure

The diamond industry faces a new reality. The long-held perception of natural diamonds as symbols of love and luxury is challenged by the rise of lab-grown diamonds. These synthetic stones boast similar physical and chemical properties to natural diamonds but at a significantly lower price point. This has caused a decline in the prices of natural diamonds, with a 6.4% drop recorded in 2024 alone.

India’s Diamond Industry

India is a major player in diamond cutting and polishing, contributing roughly 75% of the world’s polished diamonds. This industry segment traditionally thrived on exports, particularly to China. However, recent years have seen a decline in exports to China due to pandemic disruptions. While the government implements policies to boost exports and attract foreign investment, the industry must adapt to a changing market.

Analysis of Top Diamond Stocks

Price to Earnings Ratio (PE Ratio) and Historical PE

Looking at the financial performance of publicly traded diamond companies in India reveals some interesting trends. Goldiam boasts the lowest Price to Earnings (PE) Ratio (19.15) which is also near its Historical 3 year PE, suggesting it might be undervalued. Similarly, Radhika Jeweltech has a lower PE Ratio than that of other companies. On the other hand, Kalyan Jewellers and Titan Company have significantly higher PE Ratios as compared to other companies as well as their historical 3 year average PE ratios. This could indicate a potential overvaluation for these companies or investor optimism pricing future growth .

Sales growth follows a similar pattern. Radhika Jeweltec leads the pack with the highest YOY Sales Growth, followed by Sky Gold. Titan Company exhibits the slowest YOY Sales Growth, while Kalyan Jewellers has the lowest 3 Year Average Sales Growth. Cash flow analysis reveals Titan Company’s superior position with the highest Cash Flow from Operations, likely due to its larger size. Radhika Jeweltec stands out with the lowest Price to Book Value (P/BV) Ratio, potentially indicating an undervalued stock. Conversely, Titan Company’s high P/BV Ratio suggests a possible overvaluation relative to its book value.

Profitability:

Year-over-Year (YOY) Quarterly Profit Growth reveals Sky Gold’s impressive performance (123.85%). Radhika Jeweltec follows closely 114% with strong 3 Year Average Profit Growth (58.20%). Senco Gold (38.25%) and Goldiam Intl. (10.30%) exhibit moderate YOY growth, while their 3 Year Average Profit Growth falls behind those of Sky . Titan Company shows the slowest YOY growth (5.62%) but maintains a healthy 3Year Average Profit Growth (33.14%).

Sales Growth:

Sky Gold again leads the pack with the highest YOY Quarterly Sales Growth (90.20%). Radhika Jeweltec shines with impressive YoY sales growth of 54.25 % and 3Year Average Sales Growth (54.25%). Kalyan Jewellers (34.10%) demonstrates decent YOY and 3 Year Average Sales Growth. Titan Company exhibits the slowest YOY Sales Growth along with Goldiam International.

Price to Book Value (P/BV Ratio) and Industry P/BV:

The P/BV Ratio compares a company’s market price to its book value per share. A lower P/BV Ratio could indicate an undervalued stock. Radhika Jeweltec stands out with the lowest P/BV Ratio (1.27), suggesting potential undervaluation. Conversely, Titan Company’s high P/BV Ratio (5.88) indicates a possible overvaluation relative to its book value compared to the industry average (2.43).

Return over 1 year

Analyzing the one-year return data for diamond stocks reveals a diverse landscape of performance among key players. Sky Gold leads with an impressive 487.12% return, reflecting robust market confidence and significant appreciation in its stock value. This surge can be attributed to its strong profitability metrics and substantial year-over-year growth. Kalyan Jewellers follows with a notable 221.70% return, indicating solid investor sentiment driven by its extensive market reach and rapid profit growth over three years. Radhika Jeweltec also delivered substantial returns of 46.45%.

Keeping a Watchful Eye

Based on the analysis, several companies stand out as potential additions to an investor’s watchlist. Kalyan Jewellers, Senco Gold, Sky Gold exhibit strong growth in profits and sales, making them watchlist contenders. Titan Company and Goldiam Global, while not necessarily undervalued, demonstrate stable growth and operational efficiency, which could be appealing to investors seeking a more balanced approach.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.