Black galaxy granite producer Midwest targets to mop up Rs 650 crore via IPO, files DRHP with SEBI

Midwest IPO

Midwest, the largest producer and exporter of black galaxy granite, has decided to raise Rs 650 crore through the capital markets, as it has filed preliminary papers with the regulator SEBI for IPO launch.

The company plans to mobilise Rs 250 crore via fresh issue, and Rs 400 crore through offer-for-sale route, as per the draft papers. Promoters Kollareddy Rama Raghava Reddy, and Guntaka Ravindra Reddy will be selling Rs 360 crore and Rs 40 crore respectively via offer-for-sale.

Furthermore, it may also consider issue of equity shares worth Rs 50 crore via private placement. If it manages to raise funds via pre-IPO placement, the said amount will be reduced from its fresh issue.

Promoters hold 95.83 percent stake in the company, while investor Svadha India Emerging Opportunities Scheme 1, a SEBI registered AIF (category II)), owns 4.17 percent shareholding.

Svadha India invested Rs 100 crore in the natural stones mining company on September 28, 2024 by acquiring 14,08,851 equity shares (4.17 percent) at a price of Rs 709.80 per share. At the same price, the firm is valued at Rs 2,400 crore.

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With 16 operational granite mines in Telangana and Andhra Pradesh, the company produces dimensional blocks and slabs of black galaxy granite and absolute black granite. Black galaxy granite is used in real estate projects, while absolute black granite is extensively used in temples, monuments and memorials.

The Hyderabad-based company will spend Rs 156 crore out of the net fresh issue proceeds for capital expenditure towards the Phase II Quartz processing plant, purchase of electric dump trucks, and integration of solar energy at certain mines. Further, Rs 53.8 crore will be used for repaying debt, and the remaining funds for general corporate purposes.

It has total outstanding borrowings of Rs 150.4 crore as of August 2024.

Midwest that competes with listed peer Pokarna recorded 84.3 percent on-year growth in net profit at Rs 100.3 crore for the year ended March 2024, with strong operating numbers. Revenue during the fiscal 2024 at Rs 585.6 crore increased by 16.5 percent compared to Rs 502.5 crore in the previous year.

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DAM Capital Advisors, Intensive Fiscal Services, and Motilal Oswal Investment Advisors are appointed as the book running lead managers to the issue.