Midwest Limited IPO

16 Oct 2025 , 10:53 AM

Midwest is a mining and materials firm based in Hyderabad. It is an end-to-end player that explores for mines, develops them, and distributes mined materials. The mined materials include premium varieties of granite (Black Galaxy and Absolute Black), quartz, and quartzite as well as heavy minerals sand. Its IPO comprises fresh issue and offer for sale. The new issue is intended to finance the next stage of its vertical integration. With the new offer proceeds, it is expanding its output of quartz grit and powder, modernising its fleet of logistics vehicles, and strengthening the balance sheet.

Offer details of the IPO

• Total Offer Size – The issue size amounts to INR 451 crore. It consists of a fresh issuance of equity shares of up to INR 250 crore and an offer for sale (OFS) aggregating up to INR 201 crore.
• The shares being sold by existing shareholders are held by:
• Mr Kollareddy Rama Raghava Reddy (Promoter) – Up to INR 1,810.00 million
• Mr Guntaka Ravindra Reddy (Promoter Group) – Up to INR 200.00 million

 

Price Band: INR 1014 to INR 1065 per Equity Share

 

Book–Running Lead Managers

• DAM Capital Advisors Limited
• Intensive Fiscal Services Private Limited
• Motilal Oswal Investment Advisors Limited

Indian Mining & Materials Market – Overview

The mining and materials sector in India is dependent on construction, infrastructure as well as process industries – to name a few. Recent governmental reforms and the drive to source more of their inputs domestically have also helped momentum. In driving this new narrative, organisations that embrace the power of operational effectiveness and technology with an aspiration for a sustainable future have emerged as leaders. Midwest Ltd. works in three closely aligned sectors that underpin this industry and the economy as a whole.

Table: Key Segments

Key Segment	What it Covers
Natural‑Stone (Dimensional Stone) – Granite, Marble & Quartzite	Exploration, extraction and processing of dimension‑stone blocks (slabs). The key items are Black Galaxy Granite, Absolute Black Granite, and other similar coloured granites as well as exclusive marble and quartzite.
Quartz – Raw‑Material & Value‑Added Products	Mining of high‑purity quartz deposits, grinding into grit and powder for use in applications such as engineered stone, solar glass and semiconductors. Phase I of the quartz‑processing plant (≈243ktpa) is already online.
Heavy‑Mineral‑Sand (HMS) – Rutile, Ilmenite, Zircon, Garnet, Monazite & Sillimanite	Exploration, mining and beneficiation of beach‑sand placer deposits that provide titanium‑feedstock for higher value chain, such as TiO₂ pigments or as a base metal (titanium) and rare‑earth concentrates (monazite) which are the raw materials necessary to develop high‑tech, aerospace and renewable‑energy supply chains.
Diamond‑Wire Manufacturing	Manufacture of diamond‑wire, precision-cutting tools for applications in the stone processing industry and related downstream markets including semiconductors and photovoltaic panels. The Hyderabad captive plant serves internal and external customers.

Source: RHP

These segments follow a shared value chain—from prospecting to distribution—and benefit from Midwest’s vertically integrated model. The industry’s capital intensity, strict regulation, and high entry barriers favour large players with scale, mechanisation, and long-term leases, enabling a strong cost advantage.

Table: Growth snapshot

Segment	Historical CAGR (most recent 3‑yr period)	Projected CAGR (next 5‑yr horizon)	Comment
Granite (Natural‑Stone)	4.7% (FY2022‑FY2025) – On account of healthy domestic construction demand and high-end export market of black granite like BlackGalaxy Granite.	6.0%-7.0% (FY2025‑FY2030) –  growth of residential/commercial projects and increasing‑value export orientation.	The market is fragmented, but the Midwest has a distinct upside with its 64% share of BlackGalaxy exports and captive processing.
Quartz (raw & value‑added)		8.0 %–8.5 % (FY 2025‑FY 2030) – underpinned by growth in applications such as solar‑glass and high‑purity quartz.	Phase I currently produces 243ktpa; Phase II will double capacity, placing Midwest amongst a handful of global integrated quartz producers.
Heavy‑Mineral‑Sand (Ti‑feedstock & REE)		3.1 %–3.5 % (FY 2025‑FY 2030) – supported by EV, wind turbine and defence sector materials requirements.	Midwest’s recent licenses in Sri Lanka and planned processing plant (FY2027) will capture a growing non‑Chinese supply chain.
Diamond‑Wire	~5 % (FY 2023‑FY 2025) – back‑integration to support internal stone‑cutting and modest external sales.	~6 % (FY 2025‑FY 2030) – with the need for higher‑precision cutting increasingly becoming a necessity for engineered-stone, semiconductor and solar panel manufacturers.	Proprietary metallurgy and ERP-driven manufacture maintain unit costs competitive with those of larger tooling OEMs.

Source: RHP

Midwest Limited – Company Overview

Midwest Limited is an Indian mining and minerals company located in Hyderabad, India. It was incorporated in 1981 as Midwest Granite Private Limited. Key management includes Kollareddy Rama Raghava Reddy (President) and Kollareddy Ramachandra (CEO). It is engaged in natural stone mining, processing quartz and manufacturing diamond-wire tool. It has joint ventures with APMDC and IL&FS. Its subsidiaries include Midwest Neostone Private Limited and Midwest Holdings Limited (Isle of Man).

Competitive Positioning

India’s black-galaxy granite output is quite fragmented and Midwest Limited (MWL) has ~20% share, thus the biggest player in the market. Natural stone accounted for 96% of revenue in FY2025, diamond-wire tools and quartz products contributed 2% each. Its global distribution spans North America, Europe, Asia, Africa and the Middle East as well as Australia. Entry barriers in the segment include its 20+ mining leases (100% renewal) + captive quarries + sector-first ERP & equipment monitoring + R&D partners for eco-friendly tooling.

Strengths

• Vertical Integration: Mining, cutting, finished stone and distribution.
• Pricing Power: Can charge a premium due to dominant market position and higher priced availability of high grade granite.
• Operational Efficiency: Employs SAP-enabled ERP, automated diesel dispensing and sensor-based machine monitoring.
• Strategic Expansion: Phase I quartz processing plant completed; secured funding and targeted for heavy-mineral sand projects in FY2027.

Weaknesses

• Customer Concentration: Top 10 customers account for ~50% of FY2025 revenue; loss of any could impact cash flow.
• Geographic & Currency Exposure: High export dependence, especially to China; earnings sensitive to USD/EUR fluctuations.
• Litigation & Regulatory Exposure:
• CBI notice (2015) on BEML Midwest formation remains unresolved.
• Multiple civil and criminal cases involving promoters and subsidiaries.
• Capital-Intensive Asset Base: Requires ongoing equipment loans (~9% interest p.a.) and large capital outlays for expansion.

Financial Profile

Strong topline growth: Midwest recorded a revenue CAGR of 12% over the last two years. EBITDA expanded faster.

Better Profitability: Midwest Limited recorded net margins of 17.17% in FY2025 while RoE increased from 16.25% in FY2023 to 19.42% and RoCE from 14.39% to18.84%. Profitability was also supported by the premium yields from Black Galaxy Granite, and mechanised mining and automation driven efficiencies, economies of scale on higher (104,668 cu m) granite block production volume, as well as one-off gains from sale of Midwest Gold Ltd.

Table: Peers Comparison

Name of Company	Revenue from operations (₹ million)	Closing price on October 6, 2025 (in ₹)	EPS (₹) Basic	EPS (₹) Diluted	NAV (per share) (₹)	P/E
Midwest Limited	6,261.82	1065.00	39.42	39.42	163.75	27.01*
Pokarna Limited	9,301.28	769.75	60.49	60.49	250.93	12.73

Source: RHP; * – based on upper end of price band

 

Table: KPI Comparison

Company	Particulars (with units)	FY 2023	FY 2024	FY 2025	CAGR
Midwest Limited	Revenue from Operations (₹ million)	5,025.17	5,856.24	6,261.82	12%
	Revenue from the sale of Black Galaxy Granite (₹ million)	3,540.74	4,237.26	4,354.85	–
	Revenue from the sale of Absolute Black Granite (₹ million)	1,291.18	1,389.90	1,654.70	–
	Revenue from the sale of Diamond Wire (₹ million)	105.20	88.44	160.20	–
	EBITDA (₹ million)	895.87	1,514.43	1,717.80	38%
	EBITDA Margin (%)	17.83%	25.86%	27.43%	–
	Profit after tax (₹ million)	544.36	1,003.24	1,075.11#	41%
	Net Profit Margin (%)	10.83%	17.13%	17.17%	–
	Cashflow from operations (₹ million)	(519.46)	1,279.07	873.14	–
	Total assets (₹ million)	6,595.35	7,604.13	10,587.00	–
	Return on Capital Employed (RoCE) (%)	14.39%	25.00%	18.84%	–
	Return on Equity (RoE) (%)	16.25%	23.78%	19.42%	–
	Debt to Equity Ratio	0.45	0.29	0.43	–
	Interest Coverage Ratio (times)	7.51	14.11	13.37	–
	Current Ratio	1.32	1.68	1.60	–
	Working Capital Cycle (in days)	106	89	120	–
Pokarna Limited	Revenue from Operations (₹ million)	7,253.23	6,876.14	9,301.28	13%
	EBITDA (₹ million)	1,700.74	2,096.67	3,258.36	38%
	EBITDA Margin (%)	23.45%	30.49%	35.03%	–
	Profit after tax (₹ million)	658.11	873.63	1,875.49	69%
	Net Profit Margin (%)	9.07%	12.71%	20.16%	–
	Cashflow from operations (₹ million)	1,357.15	1,881.03	1,911.70	–
	Total assets (₹ million)	11,041.83	12,156.85	14,031.77	–
	Return on Capital Employed (RoCE) (%)	13.77%	18.31%	27.41%	–
	Return on Equity (RoE) (%)	12.98%	14.75%	24.11%	–
	Debt to Equity Ratio	0.89	0.66	0.42	–
	Interest Coverage Ratio (times)	2.72	4.29	7.59	–
	Current Ratio	1.64	1.96	1.93	–
	Working Capital Cycle (in days)	165	157	121	–

Source: RHP