Midwest stock hits all-time high as Motilal Oswal initiates with 'Buy'

Mining and materials firm Midwest’s shares surged as much as 4.59 per cent on Friday, December 26, 2025, to hit a fresh all-time high of ₹1,700.65 after Motilal Oswal Financial Services initiated coverage on the stock with a ‘Buy’ rating, citing the company’s leadership in premium black granite and its transition into a diversified, high-growth materials business.

 

The brokerage has set a target price of ₹2,000 per share, implying an upside of about 25 per cent from current levels. At around 12:00 noon, Midwest was trading 4.06 per cent higher at ₹1,692.05, even as the BSE Sensex was down 0.38 per cent at 85,087.38.

 

 

Motilal Oswal said Midwest’s robust cash flows from its core granite business, along with strategic investments in quartz and heavy mineral sands, position the company for sustained multi-year growth and a potential re-rating.

Granite strength anchors the business

 

Midwest is India’s largest producer and exporter of premium Black Galaxy Granite, commanding over 60 per cent share of the country’s granite exports and holding a leadership position in Absolute Black Granite. The company is vertically integrated across the granite value chain, operating 20 mines, which provides scale advantages and cost efficiencies.

 

In FY25, Midwest reported revenue of around ₹630 crore, delivering a robust five-year revenue compound annual growth rate (CAGR) of more than 21 per cent. Profitability has been a key differentiator, with Ebitda margins at 27.4 per cent and a five-year Ebitda CAGR of over 44 per cent, outperforming most granite peers. Motilal Oswal notes that this near-monopoly position in Black Galaxy and Absolute Black granite acts as a stable cash-generating engine for the company.

 

Operationally, Midwest produced about 105,000 cubic metres of granite in FY25, including nearly 66,500 cubic metres of Black Galaxy from three operating mines. Two additional Black Galaxy and Absolute Black mines are under development, which should enhance long-term resource security. The company’s cluster-based acquisition strategy, focusing on mines located close to existing assets, improves extraction efficiency and reserve replenishment while lowering operating risk. Motilal Oswal expects granite revenue and Ebit to grow at a steady 12 per cent CAGR over FY25-28, driven by volume growth and improved net sales realisation.  ALSO READ | Is Northern Arc your next growth stock? Ambit says 'Buy', 30% upside eyed

Quartz and mineral sands drive the next phase

 

Beyond granite, Midwest is scaling up two new high-value verticals that are expected to become the key growth drivers. The first is high-purity quartz grits and powder, where the company has commissioned a 303 ktpa phase-I processing plant at Vizag SEZ, operational from September 2025. Backed by proven reserves of 2.1 million tonnes, Midwest plans to double capacity to about 606 ktpa in phase II with a capital outlay of ₹130 crore.

 

The quartz business is positioned as an import-substitute opportunity, catering to high-purity applications such as semiconductors, solar photovoltaic modules and optical fibre. Domestic demand for such applications is expected to grow at around 25 per cent CAGR, offering strong volume and margin visibility. Phase-II expansion is likely to be funded through internal accruals and IPO proceeds, limiting balance-sheet strain.

 

The second diversification leg is heavy mineral sands. Midwest holds four mining leases in Sri Lanka covering minerals such as ilmenite, rutile, zircon, garnet and sillimanite, which are primarily used as feedstock for titanium dioxide. Exploration has been completed and approved by the Sri Lankan authorities, with operations expected to begin by the end of FY27, subject to environmental clearances.

 

Together, these new verticals are expected to considerably rebalance Midwest’s revenue mix. Granite’s contribution to revenue is projected to decline from around 96-98 per cent in FY25 to about 50 per cent by FY28, materially reducing concentration risk.  ALSO READ | Mirae Asset Sharekhan sees upside for Lodha on launches, Palava push

Cash flows, deleveraging and valuation comfort

 

Motilal Oswal highlights Midwest’s improving cash-flow profile as a key positive. Net debt stood at ₹220 crore in FY25, translating into a Net Debt-to-Ebitda ratio of 1.3x, which is expected to fall below 1x as operating profits rise. With quartz and mineral sands scaling up by FY27-28, operating cash flows are likely to exceed ₹200 crore annually, turning free cash flow structurally positive.

 

Overall, while the granite business is expected to grow at around 12 per cent CAGR, Motilal Oswal projects consolidated revenue and Ebitda to rise at a much faster 36 per cent and 47 per cent CAGR respectively over FY25-28, supported by the new verticals. Adjusted PAT is estimated to grow at a 56 per cent CAGR over the same period.

 

That said, Motilal Oswal initiated coverage, valuing the company at 13x FY28E EV/Ebitda and assigning a target price of ₹2,000. 

 

Key risks include export concentration, regulatory uncertainties and execution delays in scaling up the new businesses, but the brokerage believes Midwest offers a compelling blend of stable cash flows and high-growth optionality.

 

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