Midwest IPO Day 3 Highlights: Issue booked 87.89x. Check GMP, review, subscription and other details

The promoters of the company include Kollareddy Rama Raghava Reddy, Kollareddy Ramachandra, Kukreti Soumya, and Uma Priyadarshini Kollareddy. Together, the promoters possess a total of 28,598,670 Equity shares, which represent 84.58% of the issued, subscribed, and paid-up share capital of the company before the offer.

“The company’s diversification into quartz and HMS segments positions it to tap into high-growth industries such as solar glass, electric vehicles (EVs), aerospace, and semiconductors. This strategic shift aligns well with India’s push for self-reliance and comes at a pivotal time amid global supply chain disruptions. We believe these new verticals will make a meaningful contribution to the company’s revenue and enhance profitability over time. We recommend “SUBSCRIBE FOR LONG-TERM” to the issue,” said Aditya Birla Money Ltd.

On Day 3, the grey market premium (GMP) of the Midwest IPO stood at ₹110 per share at 5:02 pm. With the upper price band at ₹ 1,065 per share, the shares of the company are expected to be listed at ₹1,175, with a premium of 10.33%, according to data from Investorgain.

MP STENEKO AB (Sweden), GI-MA STONE SRL (Italy), Quanzhou Xingguang Stone Co., Ltd. (China), The Xiamen Group (China), King Marble and Granite Co. Ltd. (Thailand) and more.

On day 3, by 4:45 pm, the Midwest IPO subscription status was 87.7 times. The retail portion was subscribed 23.94 times, and the NII portion was booked 167.96 times. The Qualified Institutional Buyers (QIBs) portion received 139.87 bids, and the employee portion was subscribed 24.33 times.

Midwest is venturing into the businesses of Quartz, Laza Grey Marble, Celestia Quartzite, and Heavy Mineral Sand Mining. The company acquired and developed two Quartz mines in Andhra Pradesh in 2020, which are now prepared for extraction. Additionally, Midwest is advancing the development of three more Quartz mines in Andhra Pradesh and is setting up a Quartz processing facility with a capacity of 606,600 MTPA across two phases, focused on transforming high-purity Quartz into value-added products like grit and powder.

Midwest is involved in the exploration, mining, processing, marketing, distribution, and export of natural stones. The company is India’s largest producer and exporter of Black Galaxy Granite. It has 20 operational Mines, including 16 Granite Mines, 3 Quartz Mines, and 1 Marble Mine, and a resource base across states such as Telangana, Andhra Pradesh, Karnataka, and Tamil Nadu.

“The company’s diversification into quartz and HMS segments positions it to tap into high-growth industries such as solar glass, electric vehicles (EVs), aerospace, and semiconductors. This strategic shift aligns well with India’s push for self-reliance and comes at a pivotal time amid global supply chain disruptions. We believe these new verticals will make a meaningful contribution to the company’s revenue and enhance profitability over time. We recommend “SUBSCRIBE FOR LONG-TERM” to the issue,” said Aditya Birla Money Ltd.

The company has established a resource base comprising 25 locations across Andhra Pradesh, Telangana, Karnataka, and Tamil Nadu. Its customer base includes processors and distributors across 17 countries and five continents, with long-standing relationships and long-term contracts highlighting the company's strong market presence and reliability.

Midwest IPO subscription status was 74.17 times on day 3. The retail portion was subscribed 21.06 times, and NII portion has been booked 158.15 times, Qualified Institutional Buyers (QIBs) portion received 104.78 times bids. Employee portion subscribed 21.81 times.

The company has received bids for 23,12,24,854 shares against 31,17,460 shares on offer, at 15:12 IST, according to data on BSE.

Midwest operates 16 granite mines across six locations in Telangana and Andhra Pradesh, producing varieties such as Black Galaxy, Absolute Black, and Tan Brown granite. It maintains granite processing facilities in both Telangana and Andhra Pradesh.

MP STENEKO AB (Sweden), GI-MA STONE SRL (Italy), Quanzhou Xingguang Stone Co., Ltd. (China), The Xiamen Group (China), King Marble and Granite Co. Ltd. (Thailand) and more.

1. Quartz
2. Heavy Mineral Sand Mining
3. Laza Grey Marble and Celestia Quartzite

Half of the equity shares assigned to anchor investors within the anchor investor portion will be subject to a lock-in period of 90 days starting from the allotment date, while the other half will be locked-in for a duration of 30 days from the date of allotment.

The promoters of the Company include Kollareddy Rama Raghava Reddy, Kollareddy Ramachandra, Kukreti Soumya, and Uma Priyadarshini Kollareddy. Together, the promoters possess a total of 28,598,670 Equity Shares, which represent 84.58% of the issued, subscribed, and paid-up share capital of the Company before the Offer.

1. High Entry Barriers and Long Timelines Benefit Established Players
2. Emphasis on Innovation and Technological Advancement
3. India's Top Exporter of Black Galaxy Granite
   

1. Take advantage of the increasing demand for Black Galaxy Granite and Absolute Black Granite while building a resource base.
2. Broaden the range of Dimensional Stone products and explore new regions.
3. Diversify income by producing Quartz grit and powder.
4. Move into the heavy mineral sand mining sector.
5. Enhance and expand operations in the Diamond Wire Segment.

As of 1QFY26/FY25, the company’s top 10 customers contributed ~63%/51% to the total revenue. The company’s contracts with top 10 customers typically have a tenure ranging from two years to three years. These agreements with such customers may be terminated by giving no prior notice, and without compensation. Thus, the loss of any of these customers may adversely affect the company’s business.

1. India’s granite production rose from 17,193 KT in FY22 to 19,709 KT in FY25, led by Rajasthan, Andhra Pradesh, and Telangana. Growth is expected to continue at 6–7% annually, driven by demand, reaching over 26,000 KT by FY30.
2. Monazite and zircon are key minerals used in EVs, magnets, ceramics, and high-temperature industries. India produced 69.75 KT of monazite in FY2020. Their role in advanced technologies highlights the heavy mineral sand sector’s importance.

Midwest had entered into a shareholder’s agreement with BEML Limited in 2005 to form BEML Midwest Limited, a joint venture in which the company held 55% and BEML held 45%. Disputes later arose regarding the JV’s management, leading to multiple legal proceedings, including petitions before the Company Law Board (CLB) and criminal complaints filed by BEML against Midwest’s nominee director, alleging mismanagement and fund siphoning ( ₹11 cr). Midwest also filed a counter-petition alleging diversion of revenue by BEML.

Midwest is engaged in the business of exploration, mining, processing, marketing, distribution and export of natural stones. Midwest is India’s largest producer and exporter of Black Galaxy Granite. The company has 20 operational Mines, comprising 16 Granite Mines, 3 Quartz Mines and 1 Marble Mine, and a resource base across the Indian states of Telangana, Andhra Pradesh, Karnataka and Tamil Nadu.

As per the RHP, the company's sole listed peer is Pokarna Ltd (with a P/E of 12.73).

In an effort to broaden its current operations, Midwest is venturing into the businesses of Quartz, Laza Grey Marble, Celestia Quartzite, and Heavy Mineral Sand Mining. In November 2020, the company acquired and developed two Quartz mines in Andhra Pradesh, which are now prepared for extraction. Additionally, Midwest is advancing the development of three more Quartz mines in Andhra Pradesh and is setting up a Quartz processing facility with a capacity of 606,600 MTPA across two phases, focused on transforming high-purity Quartz into value-added products like grit and powder.

1. Discrepancy in estimate of quality and quantity of natural stone reserves in mines may impact the business.
2. Significant dependence of revenue on China as it acts as distribution hub for granite industry.
3. Disruption of production at black galaxy granite mines as this segment has major revenue dependence

Total domestic back granite production stood at 2,877 cubic meters as of FY25, which is expected to grow at a CAGR of 8-11% and reach 4,227-4,848 cubic meters by FY30. Similarly, there is a surge in quartz demand driven by solar glass and engineered stone growth. Midwest plans to add 0.5 mn tonnes of quartz grit capacity for solar glass, meeting 11-13% of FY30 demand. The company operates 3 quartz mines and has 2 additional mines under development. Phase I of quartz processing plant with an installed capacity of 303,600 MT annually commenced operations during Q2FY25, with plans to double the capacity in Phase II.

1. Investment in Midwest Neostone Private Limited, its wholly owned subsidiary, by way of a loan, towards funding capital expenditure for Phase II of the quartz grit and powder processing plant;
2. Capital expenditure for the purchase of electric dump trucks to be used by the company and investment in Andhra Pradesh Granite Private Limited (APGM), its material subsidiary, by way of a loan, for the purchase of electric dump trucks;
3. Capital expenditure for the integration of solar energy at certain mines of the company;
4. Pre-payment/re-payment of, in part or full, certain outstanding borrowings of the company and investment in APGM, by way of a loan, for pre-payment/ re-payment of, in part or full, certain outstanding borrowings of APGM; and
5. General corporate purposes.

“With 40+ years in natural stone, the company leads India’s Black Galaxy Granite export market (64%) with 44,992 cu.m. exported in FY25 and dominates Absolute Black Granite production (15.7% of black granite output). EBITDA and PAT have grown steadily. Despite a 2015 CBI notice involving promoter Mr. Kollareddy and a higher PE of 27x vs peers’ 12x, profit margins remain strong. With near-monopoly status, it is recommended to “SUBSCRIBE” for long-term, higher-risk investors,” said Canara Bank Securities Ltd.

Midwest IPO subscription status was 11.73 times on day 2. The retail portion was subscribed 8.19 times, and NII portion has been booked 33.20 times, Qualified Institutional Buyers (QIBs) portion received 1.84 times bids. Employee portion subscribed 9.12 times.

The company has received bids for 3,65,58,438 shares against 31,17,460 shares on offer, at 17:00 IST, according to data on BSE.

Midwest IPO GMP today is ₹145. This indicates Midwest share price is trading at a premium of ₹145 in the grey market on Friday, according to investorgain.com.

Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of Midwest share price was indicated at ₹1,210 apiece, which is 13.62% higher than the IPO price of ₹1,065.

According to the activities in the grey market over the past eight sessions, the GMP for today's IPO is rising and is anticipated to have a robust listing. The lowest GMP observed is ₹0.00, while the peak GMP reaches ₹175.50, as stated by experts.

'Grey market premium' indicates investors' readiness to pay more than the issue price.

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