Midwest IPO: The good and the bad

Summary: Midwest Limited is set to go public on October 15, 2025. Here, we assess natural stone processing and mining company’s strengths, weaknesses and past track record to help you decode whether its IPO is worth subscribing to.

Midwest Limited, a natural stone processing and mining company, will open its IPO (initial public offering) on October 15, 2025 and close on October 17, 2025. The company aims to raise a total of Rs 451 crore, of which Rs 250 crore comprises a fresh issue while the remaining Rs 201 crore will be an offer for sale (OFS).

We breakdown its business, financials, strengths, risks and valuation to help you make an informed investing decision.

What the company does

Midwest has over four decades of experience in the dimensional natural stone industry, spanning mining, processing, and exports. It is India’s largest producer and exporter of black galaxy granite, with a dominant 64 per cent share of exports in FY25, and also leads in absolute black granite, contributing 15.7 per cent of national output.

The company operates with mechanised, vertically integrated processes, including customised diamond wires. With a strong focus on sustainability and decarbonisation, Midwest has positioned itself as an organised player in a largely fragmented industry.

Track record and valuation

A glance at Midwest’s financials over the last three fiscals proves that the company has been on a steady footing. While revenue grew at a modest 12 per cent between FY23 and FY25, net income (profit after tax) posted an impressive 57 per cent annual growth over the same period.

At the upper end of the price band (Rs 1,065), the stock is expected to be valued at over 29 times its FY25 earnings and 4.4 times its book value. In comparison, Midwest’s only listed peer, Pokarna, trades at a P/E of over 12 times and a P/B of 3 times.

The good

Here are some of the key strengths of Midwest.

#1 Market leader in production and export of black galaxy granite

Midwest dominates the market for black galaxy granite, producing 66,548 cubic meters in FY25 and accounting for 64 per cent of India’s exports. Operating three exclusive mines, it exported 44,992 cubic meters during the financial year. 

With sale prices ranging from Rs 50,000-1,00,000 per cubic meter, among the highest in the granite category, black galaxy remains a premium product. Backed by proven reserves, mining expertise and a strong customer base, Midwest is well placed to tap this high-value product.

#2 High entry barriers

Mining is a capital-intensive, highly regulated business with long lead times and steep entry barriers. Midwest operates 20 mines across four states, including 16 granite, 3 quartz and one marble. Its mines are mechanised with a large fleet of excavators, drills and wire saws, supported by over 40 years of sectoral expertise. 

The company also leads the industry in royalty payments, contributing around Rs 35 crore in FY25. This scale, experience and regulatory strength give Midwest a clear advantage over new or unorganised players.

#3 Consistent track record

The company has delivered strong financial performance, with revenue, EBITDA and profit after tax growing at an annual growth rate of 12, 39 and 41 per cent, respectively between FY23 and FY25. A strict credit policy and advance-based customer contracts have supported healthy cash flows and a lean working capital cycle. Export sales are secured through letters of credit and long-term advances, while domestic buyers typically pay upfront or maintain deposits. This disciplined approach has limited reliance on external financing and kept finance costs in check.

The bad

Despite its market leadership and solid financials, Midwest faces certain risks.

#1 Reliance on a handful of customers

Midwest’s revenues are concentrated among a handful of large buyers, with the top 10 customers contributing between 48 and 63 per cent over FY23-25 and Q1 FY26. While no major losses have occurred so far, any abrupt termination, unfavourable renewal or reduction in volumes could significantly affect revenues, cash flows and financial health. 

In addition, over half of the company’s revenue comes from clients situated in China, which serves as a global hub for the granite industry. Any adverse developments in this market pose a further risk to Midwest’s operations.

#2 Major portion of revenue generated from a single product

A large share of the Midwest’s revenue comes from black galaxy granite, contributing around 70 per cent to its core revenue for the three-month period ended June 2025. Any disruption in production or a decline in demand for black galaxy granite could materially impact the company’s revenues, profitability and cash flows.

#3 Geographical concentration

Midwest’s operations are concentrated in Telangana and Andhra Pradesh, where its mines, processing units, quartz and diamond wire facilities and registered office are located. Its key product, the black galaxy granite, is entirely mined from Chimakurthy, Andhra Pradesh. Thus, any political, social or economic disruption, natural calamity, or infrastructure breakdown in these two states could significantly disrupt Midwest’s operations and require costly repairs.

Where will the IPO proceeds go?

Of the fresh issue size of Rs 250 crore, Midwest plans to utilise over Rs 130 crore towards funding capital expenditure in Midwest Neostone, its wholly-owned subsidiary. Around Rs 26 crore will be directed towards the purchase of electric dump trucks. The company also aims to integrate solar energy at some of its mines, for which it has planned to allocate slightly over Rs 3 crore.

The remaining Rs 56 crore will be used for repaying Midwest’s debts, in part or in full.

So, should you apply for the Midwest IPO?

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