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This, together with continued unfavourable rough-polished worth differential, is placing strain on working revenue margins (OPM) of Indian diamantaires, the ranking 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 end in a moderation in credit score metrics of CPD gamers, managed working capital cycles would maintain the general debt ranges below examine, it stated.
“The exports of minimize 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 on account of “managed and lower-than-pre-pandemic provide by mining firms” are maintaining CPD gamers’ prices below 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 on account of general inflationary pressures, it stated.“Confronted with decrease demand, diamantaires’ capacity to move on these elevated uncooked materials prices stays curtailed, which might adversely affect their working revenue margins,” the ranking 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 to date, which restricted their dependence on working capital debt, their capacity to take action going ahead would stay vital from a credit score perspective,” ICRA stated.
Polished diamond costs softened all through calendar 2022 amid a slowdown in demand, it stated.
