­Experienced management and long track record of operations
DBPL’ operations were started by Mr. Manubhai B. Davariya and Mr. Chandubhai Davariya in 1986 to process and sell polished diamonds . DBPL is currently owned and managed by the founders along with their brothers and sons. The management of the company has an industry experience of over three decades. This has helped the company in maintaining good business relations with clients. DBPL exports around 51 percent of its total sales primarily in the markets of Hongkong, USA and Belgium and imports around 60 percent of its total requirement of rough diamonds. Acuité believes the experience of the promoters is likely to help the company in maintaining their business risk profile over the near to medium future.

Stable profitability margins albeit decline in revenues
The company's revenue declined by 21.79 percent and stood at Rs. 357.18 crore in FY2024 compared to Rs. 456.66 crore in FY2023. The Cut and Polished Diamond (CPD) industry recorded a year-on-year decline of 25.23 percent in total exports between FY2024 and FY2023. The revenue and profitability of the company are directly attributable to the growth and outlook of the CPD Industry. As of March 31, 2025, DBPL reported a revenue of Rs. 312.15 crore with an estimated operating margin of around 6.3 percent. On an industry basis, the CPD industry recorded a decline of 14.93 percent in FY2025 compared to FY2024. Despite this, operating margins improved to 6.04 percent in FY2024 from 5.11 percent in FY2023. The PAT margin moderated to 1.24 percent in FY2024 from 1.28 percent in FY2023.

Acuite believes, the operating performance of the company would remain subdued on the back of challenging industry environment in domestic as well as export market. 

Moderate financial risk profile
DBPL has a moderate financial risk profile marked by moderate net worth, moderate gearing and average debt protection metrics. The tangible net worth of the company stood at Rs.143.97 crore as on March 31, 2024, as against Rs. 139.56 crore as on March 31, 2023. The gearing of the company stood below unity at 0.83 times as on March 31, 2024, as against 1.05 times as on March 31, 2023. The total debt of the company consists of long-term debt of Rs. 20.14 crore, unsecured loan of Rs. 3.12 crore, and maturing debt repayment obligations of Rs. 6.83 crore and short-term debt of Rs. 90.12 crore as on March 31, 2024. The interest coverage ratio stood at 1.64 times as on March 31, 2024, as against 1.96 times as on March 31, 2023. The DSCR stood at 1.44 times as on March 31, 2024, as against 1.71 times as on March 31, 2023. Acuite believes, the financial risk profile of the company would remain moderate on the back of no major debt funded capex plans.

Working Capital Intensive Operations

The company's operations remained working capital intensive, as evidenced by the GCA days of 291 days as of March 31, 2024, compared to 225 days as of March 31, 2023. Inventory days increased to 195 days in FY24 from 134 days in FY23, with an average inventory holding period of around 90 days. Inventory levels rose in FY24 due to low market demand, leading to a buildup of inventory and the company stocking rough and cut polished diamonds to meet customer preferences. Debtor days stood at 102 days in FY24, up from 97 days in FY23, with an average credit period allowed to customers of around 90 to 120 days. Creditor days increased to 69 days in FY24 from 31 days in FY23, with an average credit period received from suppliers of around 30 to 60 days. The average utilization of bank limits stood at approximately 83.07 percent for the last six months ending March 31, 2025.

Susceptibility of profitability margins to volatility in input prices and fluctuations in forex risk

The company runs an inherent risk of volatility in raw material prices. It imports 60 percent of its raw material requirement, i.e., rough and polished diamonds, and exports around 50 percent of its total sales. While the forex risk on imports is largely covered against exports, the price volatility risk in rough diamonds threatens the thin profitability margins of the company due to long working capital cycles and unhedged forex risk.