Midwest IPO: Leading granite player, hidden risks; what you should know

Midwest worth ₹451 crore comprises a fresh issue of 2.3 million equity shares amounting to ₹250 crore and an OFS of 1.9 million equity shares amounting to ₹201 crore

Midwest IPO: The initial public offering (IPO) of Midwest, a quartz processor serving the solar gas and engineered stone industries, will open for bidding on Wednesday, October 15, 2025. The public issue worth ₹451 crore comprises a fresh issue of 2.3 million equity shares amounting to ₹250 crore and an offer for sale (OFS) of 1.9 million equity shares amounting to ₹201 crore.  

 

The three-day subscription window is scheduled to close on Friday, October 17, 2025. The basis of allotment of shares is likely to be finalised on Monday, October 20, 2025. The stock will be listed on the National Stock Exchange (NSE) and BSE, tentatively on Friday, October 24, 2025. Midwest IPO is available at a price band of ₹1,014 to ₹1,065 per share, with a lot size of 14 shares. 

 

 

Kfin Technologies is the registrar for the issue. DAM Capital Advisors, Intensive Fiscal Services, and Motilal Oswal Investment Advisors are the book-running lead managers.

 

According to the red herring prospectus (RHP), the company plans to utilise ₹130 crore the net fresh issue proceeds for investment in Midwest Neostone, a wholly owned subsidiary, through loan, towards funding capital expenditure for the Phase II Quartz Processing Plant, ₹25.7 crore to purchase Electric Dump Trucks to be used by company and investment in APGM, a material subsidiary. Additionally, ₹3.25 crore will be used for the integration of solar energy at certain mines of the company, and ₹53.8 crore for prepayment or repayment of certain debt availed by the company and APGM. The remaining funds will be used for general corporate purposes.   ALOS READ | Last day! Rubicon Research IPO ends today; subscription up 28x, NIIs lead

Here are the key risks associated with investing in the Midwest IPO:

Uncertainty in reserve estimates: The company’s estimates of natural stone reserves may differ materially from the actual quantity and quality recoverable from its mines. Additionally, its projections regarding the operational lifespan of these mines may be inaccurate. Fluctuations in market prices, as well as changes in operating and capital costs, could render some or all of its natural stone reserves economically unviable to extract.

 

Legal risks: There are ongoing legal proceedings involving the company, its subsidiaries, directors, and promoters. Any unfavourable outcomes in these cases could negatively impact the company’s reputation, business operations, financial results, cash flows, and overall financial health.

 

Revenue concentration: As per the DRHP, Midwest depends heavily on a select group of key customers, with its top 10 clients contributing 63.22 per cent, 51.21 per cent, 48.37 per cent, and 53.51 per cent of total revenue for the quarter ending June 30, 2025, and fiscal years 2025, 2024, and 2023, respectively. A decline in revenue from these major customers could have a negative impact on the company’s operations, cash flow, and financial stability.

 

Dependence on international markets: The company also generates a portion of its revenue from international markets. During the three months ended June 30, 2025, and fiscal years 2024 and 2023, over 50 per cent of its revenue came from customers based in China, which serves as a key global distribution centre for the granite industry. Any negative changes in these markets or disruptions to China’s role as a distribution hub could adversely impact the company’s business and operational results.

Here are the key competitive strengths of Midwest, as outlined in the RHP:

Market leadership in Black Galaxy Granite: Midwest is India’s largest producer and exporter of Black Galaxy Granite — a premium variety found exclusively in a single village in Andhra Pradesh. In FY25, it produced 66,548 cubic meters of Black Galaxy Granite and accounted for approximately 64 per cent of India’s total block granite exports in this category, according to DRHP.

 

Presence across the dimensional Granite value chain: The company operates across the full value chain of dimensional granite — from mining to distribution. With 16 active granite mines, it extracts and supplies dressed granite blocks in varieties such as Black Galaxy, Absolute Black, and Tan Brown. Additionally, it runs two processing facilities where smaller blocks are cut and polished for end-use applications, including countertops, steps, window sills, dining islands, facades, and wall or floor cladding.

 

Focus on R&D and technological advancements: Midwest places strong emphasis on research and development, focusing on two key areas, including identifying and evaluating new mineral deposits to expand its resource base, and developing techniques to enhance operational efficiency, reduce costs, and improve product quality. Its dedicated R&D and exploration team consists of eight professionals - including six geologists, one quality control specialist, and one chemist - with an average industry experience of 16.10 years.

 

Consistent financial and operational growth: According to the DRHP, Midwest has demonstrated a strong track record of financial and operational performance, supporting its growth and diversification plans. Between FY23 and FY25, its revenue from operations, Ebitda, and profit after tax registered a compound annual growth rate (CAGR) of 11.63 per cent, 38.47 per cent, and 40.53 per cent, respectively.