- Business Overview**
- Core Activities:
Midwest Limited (formerly Midwest Granite Pvt. Ltd.) is primarily engaged in mining, quarrying, and processing of natural stones, particularly granite blocks and slabs (notably “Black Galaxy” and “Absolute Black”) for export.
The company has diversified into Quartz mining and processing, through its wholly owned subsidiary Midwest Neostone, developing a Quartz Processing Plant (Phase I & II) in Andhra Pradesh. - Products & Services:
- Black Galaxy Granite
- Absolute Black Granite
- Diamond Wire tools
- Quartz grit and powder (new segment)
- Revenue Streams:
Predominantly from exports of processed granite and quartz products, supplemented by domestic sales and service contracts in mining. - Geographical Presence:
Operates in India, Mozambique, Mauritius, and Sri Lanka, with subsidiaries like Midwest Africa LDA, Midwest Koriba LDA, and Southasia Granite & Marble Pvt. Ltd.
Exports contribute a significant share of revenue, especially to China, the US, and Europe.
2. Industry & Market Overview
(Based on CRISIL Report, Oct 2025)
- Industry Scope:
Covers the granite, quartz, and heavy mineral sand industries. - Market Trends:
- India is a global leader in granite and quartz exports.
- Quartz processing is a growing market, driven by rising demand for engineered stone and construction materials.
- Global demand for premium black granite (especially “Black Galaxy”) remains steady.
- Growth Potential:
- Indian quartz exports expected to grow at ~12–15% CAGR (2024–2029).
- Global demand for processed natural stones growing ~8–10% CAGR.
- Competition:
Key peers include Pokarna Limited, Aro Granite Industries, and Asian Granito India Ltd.
3. Objects of the Issue
(Source: Page 116–119)
Use of Net Proceeds:
- Investment in Midwest Neostone (wholly owned subsidiary)
- For Phase II Quartz Processing Plant in Andhra Pradesh.
- Purpose: fund capital expenditure and diversify revenue streams.
- General corporate purposes.
- No debt repayment or OFS component disclosed in the extracted sections.
4. Financial Highlights (₹ million)
| Particulars | FY23 | FY24 | FY25 | Jun 2025 (Q1) |
|---|---|---|---|---|
| Revenue from Operations | 5,025.17 | 5,856.24 | 6,261.82 | 1,422.65 |
| EBITDA | 895.87 | 1,514.43 | 1,717.80 | 389.70 |
| EBITDA Margin | 17.83% | 25.86% | 27.43% | 27.39% |
| PAT | 544.36 | 1,003.24 | 1,075.11 | 243.80 |
| Net Profit Margin | 10.83% | 17.13% | 17.17% | 17.14% |
| Cash from Operations | (519.46) | 1,279.07 | 873.14 | 284.08 |
| EPS (₹) | – | – | – | – |
| ROE / ROCE | – | ~14–16% (estimated from PAT & equity) | – | – |
Trend:
Steady revenue and profitability growth. Significant jump in EBITDA margin since FY23 indicates operational efficiency and cost control.
5. Cash Flow Analysis
(₹ in million)
- Operating Activities:
Positive in FY24 & FY25 after negative cash flow in FY23. Reflects strong working capital recovery and efficient receivable management. - Investing Activities:
Large outflows due to Phase I Quartz plant capex (₹1,838M in FY25). - Financing Activities:
Strong inflows from borrowings in FY25 (₹1,144M long-term). - Overall:
FY25 cash decreased marginally due to high capital expenditure, but operations remain self-funding.
6. Risk Factors
- High project concentration in the quartz plant (Phase II funding dependency).
- Dependence on export markets (exposed to currency and geopolitical risks).
- Subsidiary BEML Midwest Limited under liquidation – reputational/legal risk.
- Regulatory proceedings against promoter (Mr. Kollareddy Raghava Reddy) linked to BEML Midwest.
- Cyclicality of granite demand and volatility in international construction markets.
- Audit trail compliance issues noted (enabled mid-2024).
7. Promoter & Management Analysis
- Promoters:
- Mr. Kollareddy Ramachandra – Whole-time Director
- Mr. Kollareddy Uma Priyadarshini – Whole-time Director
- Mr. Kollareddy Raghava Reddy – Promoter
- Promoter Holding:
- Pre-IPO: ~100% (direct & through subsidiaries)
- Post-IPO: Diluted (exact % not extracted in available text).
- Past Legal/Regulatory Issues:
BEML Midwest Limited (subsidiary) under NCLT liquidation (Oct 2023); MCA investigation with adverse remarks on promoter.
8. Related Party Transactions
(Ref: Page 392)
Includes:
- Loans to subsidiaries (Midwest Neostone, Midwest Africa LDA, Maven Holdings).
- Investment and fund transfers for overseas operations.
- Transactions appear operationally linked and not abnormally priced.
9. Peer Comparison & Valuation
| Company | FY25 Revenue (₹ mn) | EBITDA Margin | PAT Margin | P/E (approx.) |
|---|---|---|---|---|
| Midwest Ltd. | 6,262 | 27.4% | 17.2% | TBD |
| Pokarna Ltd. | 9,301 | 35.0% | 20.2% | 24–26x |
| Aro Granite | 3,000 | 9–10% | 4–5% | 15–18x |
Inference:
Midwest’s operational performance is strong with competitive margins, but the valuation fairness will depend on final IPO pricing. If priced below 20–22x FY25 EPS, it appears reasonably valued compared to Pokarna.
10. Red Flags
⚠ Governance Concerns:
- Historical issues with BEML Midwest liquidation and MCA investigation.
- Audit trail lapses (enabled only in 2024).
⚠ Operational Concerns:
- Heavy dependence on Black Galaxy granite exports.
- High capital expenditure commitments for new quartz projects.
- Some subsidiaries’ financials unaudited or based on foreign auditors’ conversion.
⚠ Positive Note:
- No major OFS (Offer for Sale) component, indicating promoter confidence.
- Healthy EBITDA growth, improving margins, and diversified product line.
✅ Overall Analyst View:
Midwest Limited presents a strong growth story in natural stone and quartz diversification, backed by decades of experience.
However, legacy governance risks and execution of the new quartz venture are key monitorables.
If priced conservatively, the IPO could be attractive for long-term investors seeking exposure to the industrial minerals and export segment.