Granite producer Midwest gets Sebi nod for IPO worth Rs 650 crore

Midwest, one of the largest producers of Black Galaxy Granite, has received Sebi's clearance to raise funds through an initial public offering, an update with the capital markets regulator showed on Tuesday.

The proposed Initial Public Offering (IPO) of Hyderabad-based Midwest is a mix of fresh issue of shares up to Rs 250 crore and an Offer For Sale (OFS) of up to Rs 400 crore by promoters. The offer also includes reservation for subscription by eligible employees, according to the Draft Red Herring Prospectus (DRHP).

The OFS consists of sale of shares worth up to Rs 360 crore by Kollareddy Rama Raghava Reddy and up to Rs 40 crore by Guntaka Ravindra Reddy.

Besides, the company may consider raising Rs 50 crore in a 'pre-IPO' placement round. If such placement is completed, the fresh issue size will be reduced.

As per the update, Midwest Ltd, which filed preliminary IPO papers with Sebi in October last year, obtained its observation letter on February 4, 2025.

In Sebi's parlance, obtaining observation means its go-ahead to float the public issue.

Going by the draft papers, proceeds from the fresh issuance to the tune of Rs 127.05 crore will be allocated for capital expenditure by Midwest Neostone, the company's wholly-owned subsidiary, for the second phase of the quartz grit and powder processing plant.

Also, Rs 25.75 crore will be used for purchase of electric dump trucks and Rs 3.26 crore for integrating solar energy at selected mining locations.

An amount of Rs 53.80 crore will be used for payment of debt and the remaining funds for general corporate purposes.

Midwest is India's largest producer and exporter of Black Galaxy Granite, a premium variety of granite, which has a sparkling feature with flakes of a golden hue. It is used in real estate projects for applications including countertops and vanities, flooring, cladding, bathroom walls and floors.

The company's revenue from operations increased by 16.54 per cent to Rs 585.62 crore in fiscal 2024 from Rs 502.52 crore in fiscal 2023, while profit after tax increased by 84.30 per cent to Rs 100.32 crore from Rs 54.44 crore.

DAM Capital Advisors, Intensive Fiscal Services and Motilal Oswal Investment Advisors are the book-running lead managers, and KFin Technologies is the registrar of the issue. The company's shares will be listed on the BSE and NSE.

In a separate development, the regulator returned the IPO document of Dev Accelerator Ltd on February 5. The draft offer document was filed in October 2024, the update showed.