Diamond exports may fall up to 15% in FY24, says ICRA – ET Retail

Kolkata: Diamond exports are on a freefall as a consequence of world recession. After an anticipated contraction of 8-10% in 2022-23, Indian cut and polished diamond (CPD) exports are more likely to additional reasonable by 10-15% to $19-20 billion in FY24, ICRA stated on Friday.

This, together with continued unfavourable rough-polished value differential, is placing strain on working revenue margins (OPM) of Indian diamantaires, the score company stated in a report.

It expects OPMs of those gamers to have declined by 50 foundation factors to five.5% in FY23 and by one other 25-50 bps in FY24.

Whereas this might lead to a moderation in credit score metrics of CPD gamers, managed working capital cycles would maintain the general debt ranges underneath verify, it stated.

“The exports of cut and polished diamonds from India are set to contract by 8-10% to $22 billion in FY2023, amid macroeconomic headwinds and tightening of surplus liquidity worldwide,” ICRA stated.

It stated agency costs of tough diamond as a consequence of “managed and lower-than-pre-pandemic provide by mining corporations” are maintaining CPD gamers’ prices underneath strain.

The demand pressures are extra distinguished within the large-sized diamonds as consumers downgrade to smaller sized diamonds and a few shift to lab-grown diamonds as a consequence of general inflationary pressures, it stated.

“Confronted with decrease demand, diamantaires’ capacity to cross on these elevated uncooked materials prices stays curtailed, which might adversely impression their working revenue margins,” the score company stated.

It expects tough costs to stay agency in FY2024 as nicely, as no main ramp-up in mining output of tough diamonds is predicted over the following two years.

The worldwide demand slowdown, led by inflationary pressures and the latest banking disaster, are anticipated to exert strain on revenues in FY2024 as nicely.

“Whereas CPD entities maintained a strict management over the working capital cycle up to now, which restricted their dependence on working capital debt, their capacity to take action going ahead would stay essential from a credit score perspective,” ICRA stated.

Polished diamond costs softened all through calendar 2022 amid a slowdown in demand, it stated.

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