Acuite has consolidated the business and financial risk profile of JKSPL and AVPSPL together referred as ‘J. K. Star Group’. The consolidation is in view of common management and financial linkages between the entities. Furthermore, JKSPL has extended corporate guarantee for the loans of AVPSPL.
 

Experienced management and established operations of the group­
The promoters of AVPSPL were already in the business of selling natural diamonds under JKSPL and have an experience of more than 25 years in the diamond industry. The group exports to USA, Hongkong, UAE and others. Acuite believes that even though lab-grown diamonds are a different segment, the promoter’s experience in the natural diamond industry will benefit the group over the medium term.

Steady scale of operations during FY26
The group’s operating performance remains susceptible to volatility in the diamond industry. The group reported operating income of Rs.1126.19 Cr in FY26 (Prov.), broadly stable compared to Rs.1122.83 Cr. in FY25. The revenue growth in AVPSPL was primarily driven by increasing demand for lab-grown diamonds, resulting in a significant increase in the sales volume of polished lab-grown diamonds during FY26 (Prov.). However, this growth was partly offset by moderation in the revenues of JKSPL, attributable to subdued demand for natural diamonds, decline in price realizations and a shift in consumer preference towards relatively affordable lab-grown diamonds. Further, the group achieved revenue of Rs.199.61 Cr. in Q1FY27.
The EBITDA margin stood at 6.72% in FY26 (Prov.) as against 6.62% in FY25 primarily supported by an increased contribution from the lab-grown diamond segment, which commands relatively better margins than the natural diamond segment. The PAT margin stood at 2.79% in FY26 (Prov.) as against 2.74% in FY25. Acuite believes the scale of operations of the group will remain on similar levels over the medium term backed by demand of lab grown diamonds and recovery in the natural diamonds industry.

Healthy Financial Risk Profile

The financial risk profile of the group remained healthy marked by increase in net worth, gearing below unity and comfortable debt protection metrics. The tangible net worth stood at Rs. 305.23 Cr. as on 31^st March 2026 (Prov.) as against Rs.274.12 Cr. as on 31 March 2025 due to accretion of reserves and quasi-equity. JKSPL has further infused Rs.3.50 Cr. in AVPSPL through 0.1% redeemable preference share capital during FY24. The net worth includes Rs. 20.00 Cr. of cumulative redeemable preference shares which are being treated under quasi equity as it will remain in the business till the tenure of 15 years i.e. 2037. The gearing of the group stood below unity at 0.67 times as on 31st March 2026 (Prov.) as against 0.60 times as on 31 March 2025. The Total Outside Liabilities to Tangible Net Worth (TOL/TNW) ratio stood steady at 0.93 times in as on 31 March 2026 (Prov.) as against 0.68 times as on 31 March 2025. The debt protection metrics of the group remained comfortable marked by Interest Coverage Ratio (ICR) of 4.67 times and Debt service coverage ratio (DSCR) of 2.22 times in FY2026 (Prov.) as against 4.47 times and 2.31 times respectively in FY25. Acuite believes that the financial risk profile of the group will remain on similar levels over the medium term backed by steady networth and moderate capital structure due to debt funded capex plans.

Moderately Intensive working capital cycle
The working capital remains moderately intensive in nature marked by GCA Days of 140 days for FY26 (Prov.) as against 109 days for FY25. The increase was primarily driven by higher inventory and receivable levels. The inventory days stood at 76 days for FY26 (Prov.) as against 61 days for FY25 mainly due to higher procurement of rough lab-grown diamonds (LGDs) externally to cater to the growing demand for LGDs. The group generally maintains inventory equivalent to around 2.5 months of operations, considering the processing cycle of approximately 2–3 months for conversion of rough into polished lab grown diamonds. Furthermore, the receivables days stood at 56 days in FY26 (Prov.) as against 45 days in FY25. The group generally extends credit terms of around 90–150 days for export sales, while domestic sales have a relatively shorter credit period of around 30 days. Against this, the creditor days of the group stood at 27 days in FY26 (Prov.) as against 7 days in FY25. The group receives credit terms of around 60–120 days from its suppliers. Acuite expects the group’s working capital cycle to remain at similar levels over the medium term, given the inventory holding requirements associated with the growing LGD business and the credit period extended to customers.

Susceptibility to US tariff-related risks and rising competition from lab-grown diamonds
The cut-and-polished diamond industry has continued to face headwinds over the last two to three years, driven by subdued international demand and the rising popularity of lab-grown diamonds (LGDs). These factors have weighed on realizations and pressured margins. Export volumes had declined by the imposition of US tariffs—prompting manufacturers to curtail production and diversify into newer markets across Asia, Europe and the Middle East. Within the B2B jewellery segment, the sector remains susceptible to regulatory changes that can materially impact procurement and supply chain processes. Demand from wholesale clients also fluctuates with seasonal trends such as festivals, auspicious buying periods and retailer stocking cycles. Exposure to volatility in diamond prices remains a critical operational risk, though manufacturers benefit partially from hedging mechanisms and favourable supplier credit terms.

­Increase in revenues of above Rs.1300 Cr along with maintaining operating margins above 6%
Improvement in working capital cycle

­Significantly lower-than-expected ramp-up in scale or sharp decline in revenues to below Rs.1000 Cr
Any large, debt-funded capex or sizeable stretch in the working capital cycle, weakening financial and liquidity risk profiles