Rough diamond prices are likely to remain firm in FY2024 as no major ramp-up in mining output (of rough diamonds) is expected over the next two years. This, coupled with recessionary pressures, shall continue to exert pressure on the revenues and profit margins of Indian cut and polished diamond ( CPD ) entities. ICRA expects revenues and OPMs of CPD players to decline by 8-10% and by 50 bps respectively.
Raw diamond prices are predicted to stay strong in FY2024, as no significant increase in mining output (of rough diamonds) is anticipated over the following two years. According to credit rating agency ICRA, this, combined with recessionary challenges, would continue to put pressure on the sales and profit margins of Indian cut and polished diamond (CPD) firms in FY2024. While CPD businesses have kept strong control over the working capital cycle thus far, limiting their reliance on working capital loans, their capacity to do so in the future remains crucial from a credit standpoint.
According to Sakshi Suneja, Vice President and Sector Head – Corporate Ratings at ICRA Limited, “While additional expenditure channels are being opened, global surplus money is being unwound, and inflationary pressures are building in major consumer markets, After a stellar success in FY2022, Indian diamantaires are experiencing a slowdown in demand in FY2023, headed by areas in the United States and Europe. Cost pressures remain elevated as a result of solid rough pricing (due to mining firms’ sustained restricted and lower-than-pre-pandemic supply).”
She said “Due to weaker demand, cut and polished diamond (CPD) businesses’ capacity to pass on these increased raw material prices remains limited, thereby impacting their operational profit margins (OPMs). As a result, ICRA anticipates CPD players’ revenues and OPMs to fall by 8-10% and 50 basis points, respectively, in FY2023.”
Rough diamonds are diamonds that have not been cut, polished, or subjected to any procedure or treatment after being mined. They are precisely how they are after being discovered in the soil. Rough diamonds are also known as uncut diamonds, raw diamonds, and natural diamonds.
Rough diamonds are prized for their pristine condition and inherent beauty. Their worth is derived from both their beauty and their raw material, and many people are unaware that the price of a polished diamond is determined by the cost of the rough diamond.
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