IPO Size: Rs. 451 cr

• Fresh Issue of Rs. 250 cr for (i) capex Rs. 159 cr (ii) repayment Rs. 56 cr of Rs. 250 cr net debt
• Offer for Sale (OFS) of Rs. 201 cr by the promoter (96% stake to shrink to 84%)

Price band: Rs. 1,014-1,065 per share

M cap: Rs. 3,851 cr, implying 12% dilution

IPO Date: Wed 15^th Oct to Fri 17^th Oct 2025, Listing Fri 24^th Oct 2025

Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.

India’s Largest Black Galaxy Granite Miner

Midwest Limited is a Hyderabad-based granite mine owner, producing black galaxy granite and absolute black granite, enjoying 64% and 15% market share respectively. Black galaxy is a highly valued natural stone available only in 1 village in Andhra Pradesh, in the whole world. Company operates 16 mines and 2 processing facilities in Telangana and Andhra Pradesh, with Rs. 626 cr revenue, is split 70:30 between black galaxy granite and absolute black granite respectively. Over half of company revenue comes from exports to China, Thailand and Italy.

Diversifying to Higher-margin Products

Quartz Expansion: Company has diversified into quartz production, through commercialization of 3 lakh MTPA quartz processing capacity, in Andhra in Sep 2025, established with about Rs. 130 cr investment. Additional 3 lakh MTPA capacity is being funded via IPO proceeds, likely to be operational by Jun 2026. Company has mines with proved reserves of 2.1 million tonnes of quartz, which used in engineered stone, solar glass, semi-conductors, foundries etc.

Rare Earth: It also plans diversification in Heavy Mineral Sand mining in Sri Lanka by FY27E.  

Unimpressive Financials

Between FY22 to FY25, black galaxy granite sale volume rose at only 6% CAGR with similar growth in revenue. FY25 EBITDA margin was at 32%, with PAT margin of 20%. Q1FY26 revenue was at Rs. 142 cr, but YoY growth is not disclosed. Also, margins contracted, with EBITDA down to 27% EBITDA and net margin to 16%.

On an equity of Rs. 17 cr (FV Rs. 5 each) and net worth of Rs. 642 cr, EPS stood at Rs. 39 and Rs. 7 for FY25 and Q1FY26 respectively. Company’s working capital has increased, as debtors doubled to Rs. 234 cr, as of 30.6.25, from Rs. 119 cr as of 31.3.24. Thus, outstanding debtors days doubled from 2.4 months to 4.6 months in past 15 months, which is concerning.

Expensive Pricing

M cap of Rs.3,850 cr, leads to a historic PE multiple of 27x which is expensive for the micro-cap stock and B2B operations. Larger quartz peer Pokarna, with Rs. 900 cr topline and 20% net margin is trading at a PE multiple of just 12x. Even if some premium is assigned for growth, due to new capacity, Midwest IPO is seen over-valued.

In Sep 2024, promoter did Rs. 100 cr secondary sale of 4% stake at Rs. 710 per share. After 13 months, 50% premium is seen unjustified, especially when net profit for owners rose by only 27% YoY in FY25.