NEW DELHI: Women may begin incorporating a mix of natural diamonds and lab-grown diamonds (LGD) into their jewellery collections, leading to a gradual increase in the adoption of LGD-studded jewellery, according to Kotak Institutional Equities report. This shift is expected to be influenced by factors such as education levels, disposable income and evolving fashion preferences.
With LGDs available at significantly lower prices than natural diamonds, the jewellery industry is poised for change in the coming years. The affordability of LGDs may reshape purchasing patterns, offering consumers more choices while altering the dynamics of the traditional diamond market.
Meanwhile, gold’s role as a store of value remains strong, but its form of investment could evolve. Financial gold products like gold exchange-traded fund (ETF) may attract a larger share of household investments, potentially reducing the demand for physical gold jewellery. As these trends unfold, the jewellery sector is set for a period of adaptation and growth.
While gold has traditionally been viewed as an asset that holds value over time, LGDs are emerging as an affordable alternative in the jewellery market. This shift could redefine how Indian consumers approach their gold and jewellery purchases.
The rise of LGDs and the shift toward financial gold could pose risks for jewellery companies in three key areas. First, revenue growth could be affected if households reduce their purchases of physical gold jewellery in favour of gold ETFs.
Second, profitability may come under pressure as LGDs, which are cheaper than natural diamonds, gain market share. Lastly, stock valuations of leading jewellery companies could be impacted if these trends materialize, as current valuations do not fully account for these potential changes.
While gold is expected to retain its status as a store of value, the way Indian households view jewellery is evolving. (ANI)