Midwest IPO Day 1: Issue booked 1.84x so far. Latest GMP, subscription status to review. Should you apply or not?

Midwest IPO subscription, initial public offering of the firm based in Telangana, starts on October 15 and will end on October 17. Midwest IPO price band is set between ₹1,014 and ₹1,065 per share for its total of ₹451 crore. Midwest IPO GMP today is ₹145. This indicates Midwest Life share price is trading at a premium of ₹145 in the grey market on Wednesday, according to investorgain.com.

Quartz Processor Midwest, recognized as India's leading manufacturer of Black Galaxy and Absolute Black granite, raised ₹135 crore from anchor investors in advance of its initial public offering, on October 14.

Notable institutions participating in the anchor investment include Goldman Sachs Funds – specifically the Goldman Sachs India Equity Portfolio – and Edelweiss Life Insurance Company.

Midwest IPO has allocated 50% of the shares in the public offering for qualified institutional buyers (QIB), 15% for non-institutional investors (NII), and at least 35% for retail investors. Additionally, there are shares reserved for employees amounting to a total of up to 1 crore.

The company focuses on the exploration, mining, processing, marketing, distribution, and export of natural stones, prioritizing sustainable methods. Midwest is also one of the largest producers of Absolute Black Granite, which is known for its remarkable surface quality, both of which enjoy high demand. The production of Absolute Black Granite accounted for 10.8% of India's total black granite output in Fiscal 2024.

Midwest IPO subscription status

Midwest IPO subscription status was 1.84 times on day 1. The retail portion was subscribed 1.60 times, and NII portion has been booked 4.17 times, Qualified Institutional Buyers (QIBs) portion received 50% bids. Employee portion subscribed 2.54 times.

The company has received bids for 57,33,840 shares against 31,17,460 shares on offer, at 17:00 IST, according to data on BSE.

Midwest IPO review

SBICAP Securities noted that Midwest stands as the largest producer and exporter of Black Galaxy Granite in India. The company has shown a robust CAGR in Revenue/EBITDA/Adj.PAT of approximately 11.6%/38.5%/40.5%, reaching ₹626 crore/ ₹172 crore and ₹108 crore, respectively, from FY23 to FY25.

With the upper price band set at ₹1,065, the IPO is priced at a FY25 P/E and EV/EBITDA ratio of 35.8x and 22.4x, respectively, based on post-issue capital. Although the company operates in a capital-intensive sector, it achieves RoE/RoCE of 17.4% and 19.1%, respectively. However, when compared with peers, the issue commands a premium valuation. The brokerage maintains a NEUTRAL stance on the offering and intends to observe the company's performance after the listing.

Midwest IPO details

The firm plans to raise ₹250 crore by issuing new shares, while its promoters - Kollareddy Rama Raghava Reddy and Guntaka Ravindra Reddy - will be selling shares worth up to ₹201 crore through an offer-for-sale. The initial value of the IPO has been reduced from ₹650 crore as the company has modified its offer-for-sale figure to ₹201 crore, down from the previously indicated ₹400 crore.

The funds obtained from the offer-for-sale will go entirely to the selling shareholders. The promoters possess 95.83 percent of the company's shares, with the remaining 4.17 percent held by SVADHA India Emerging Opportunities Scheme 1.

SVADHA India acquired 14.08 lakh shares (which equates to a 4.17 percent stake) in Midwest for ₹100 crore at a price of ₹709.80 per share on September 28, 2024. The Midwest IPO is being overseen by DAM Capital Advisors, Intensive Fiscal Services, and Motilal Oswal Investment Advisors, with Kfin Technologies Ltd serving as the registrar for the offering.

Midwest IPO GMP today

Midwest IPO GMP today is ₹145. This indicates Midwest share price is trading at a premium of ₹145 in the grey market on Wednesday, 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 grey market activities over the past six sessions, the IPO GMP is trending upward today, indicating a robust listing is anticipated. The minimum GMP recorded is ₹0.00, while the maximum reaches ₹145, as per experts' assessments.

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

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.