Rough diamond price is likely to remain stable in 2024 as mining (of rough diamonds) is not expected to increase sharply in the next two years. This, coupled with recessionary pressures, will continue to put pressure on India’s cut and polished diamond sales and margins (CPD) in fiscal year 2024, according to credit ratings the firm ICRA.
Although CPD institutions have so far maintained tight control over the working capital cycle, which has limited their reliance on working capital debt, their ability to do so So going forward is still important from a credit perspective.
Sakshi Suneja, Vice President & Industry Manager – Corporate Ratings, ICRA Limited said, “While opening up other avenues of spending, releasing excess global liquidity and inflationary pressures in prime consumption. After witnessing impressive performance in 2022, companies Indian diamond companies are facing demand moderation in 2023, led by regions of the United States and Europe. Cost pressures also remain elevated due to stable rough diamond prices (as supply continues to be controlled and lower than pre-pandemic by miners).
“Faced with lower demand, the ability of cut and polished diamond (CPD) entities to pass on these inflated raw material costs remains limited, which will adversely affect the economy,” she added. As a result, ICRA expects CPD player revenue and OPM to decline by 8-10% and 50 bps respectively in fiscal year 2023.”