Lab-Grown Diamonds A Watchful Factor For Titan, But Less Relevant For Trent: Saurabh Mukherjea

While the demand for lab-grown diamonds has not gained significant traction in Western markets, they could resonate more in India due to the country’s price-sensitive market, according to Saurabh Mukherjea, the founder of Marcellus Investment Advisors.

In an exclusive interview with NDTV Profit, Mukherjea provided insights on lab-grown diamonds and their impact on Indian jewellery giants Titan Co. and Trent.

He noted that Marcellus had reduced its position in Titan slightly, citing concerns about the potential effect of LGDs on the brand's business. However, they remain invested, with Titan still holding a notable position in Marcellus' portfolio.

He shared that discussions with Titan over the past year have focused on the company's strategy regarding LGDs. "I don't think lab-grown diamonds is a significant part of our earnings forecast for Trent. For Titan, for the last one year or so, we have had constant discussions with them about what they plan to do about this space," he said.

Mukherjea confirmed that Marcellus's decision to reduce Titan holdings was influenced by concerns around LGDs. “It will be fair to say that we are concerned. So far, the concern has resulted in, as of six-seven months ago, a reduction in a position size on Titan. It's still a chunky part of consistent compounders, but yes, LGD has warranted a reduction in our position size in Titan," he said.

"In the western world, lab-grown diamonds haven't turned out to be a big hit. In the Indian context, maybe it will because, you know, we are price sensitive. In the Indian context, we are keeping a watchful eye on the issue," Mukherjea said.

Titan's recent quarterly results showed strong growth across key segments, especially jewellery, where revenue surged by 15% to Rs 12,771 crore. Domestic sales increased by 25%, reaching Rs 10,568 crore, driven by robust demand within India.

Regarding Trent, Mukherjea indicated that lab-grown diamonds haven't been a significant factor in their forecasts. "In Trent's case, we really haven't baked it into the numbers,” he shared. "Trent is doing so much else, which I think will shoot the lights out, that we haven't really lost a lot of sleep on LGD for Trent."

Mukherjea’s remarks have a cautious yet optimistic outlook on the Indian market's adaptation to lab-grown diamonds, particularly for players like Titan and Trent that operate within the evolving jewellery landscape.