Midwest IPO Day 1: Issue subscribed over 30% so far; check GMP, and other key details; Should you invest? – News Air Insight

Midwest, a player in natural stone mining and exporting, launched its Rs 451-crore initial public offering (IPO) for subscription today, October 15. Within the early hours of Day 1, the issue was subscribed by 35%, with bids received for 10.31 lakh shares against the total offer of 31.17 lakh shares.

The grey market premium (GMP) for the Midwest IPO is currently trading at an 11.74% premium above its issue price of Rs 1,065.

The book-built IPO consists of a fresh issue worth Rs 250 crore and an offer for sale (OFS) of Rs 201 crore by existing shareholders. The subscription window will close on October 17, with allotment expected by October 20 and the shares scheduled to be listed on both BSE and NSE on October 24.

Midwest Subscription Status:

As of 11:20 AM on Day 1, the overall issue was subscribed at 35%.

Retail Individual Investors (RIIs) have subscribed to 45% of their allotted portion, totaling 15.53 lakh shares.

Non-Institutional Investors (NIIs) have subscribed to 56% of their offer, amounting to 6.56 lakh shares.

Qualified Institutional Buyers (QIBs) have not yet submitted any bids for their allocated 8.87 lakh shares.

Midwest IPO GMP Today:

The grey market premium (GMP) for the Midwest IPO is currently around 11.74% higher than its issue price of Rs 1,065. This suggests that the shares are expected to list at approximately Rs 1,190, indicating positive investor sentiment and demand ahead of the official market debut.

Midwest IPO Details:

The price band for the Midwest IPO has been fixed between Rs 1,014 and Rs 1,065 per share, and investors can bid for a minimum of 14 shares, amounting to Rs 14,910 at the upper end of the price range. Retail investors can apply for up to 13 lots (182 shares) worth Rs 1.94 lakh. DAM Capital Advisors is the book-running lead manager and KFin Technologies the registrar to the issue.

Strong Fundamentals and Global Presence

Midwest is involved in the exploration, mining, processing, marketing, and export of granite and natural stones. It is widely recognized for producing Black Galaxy Granite, a unique variety known globally for its distinctive golden sparkle. The company operates 16 granite mines across Telangana and Andhra Pradesh, supported by two large-scale processing facilities, one in each state.

Midwest exports its products to 17 countries across five continents, with major markets including China, Italy, and Thailand. Notable clients include GI-MA Stone (Italy), MP STENEKO AB (Sweden), and The Xiamen Group (China).

Financial Performance

Midwest has shown steady growth in recent years. For FY25, it posted a 7% rise in revenue to Rs 643 crore, while profit after tax surged 33% to Rs 133 crore.

The company’s financial health appears solid, with a conservative debt-to-equity ratio of 0.43 and a net worth of Rs 554 crore. Based on the IPO’s upper price band, the market capitalization is estimated at approximately Rs 3,851 crore.

Use of Proceeds

Midwest intends to use the IPO funds primarily for expansion initiatives. A portion will be allocated to its wholly owned subsidiary, Midwest Neostone, to develop the Phase II Quartz Processing Plant. Additionally, the company plans to purchase electric dump trucks to enhance sustainability, install solar power systems at select mines, and prepay a portion of its existing debt.

Should You Bid?

According to SBI Securities, Midwest is India’s largest producer and exporter of Black Galaxy Granite. The company has demonstrated strong growth, with a compound annual growth rate (CAGR) of approximately 11.6% in revenue, 38.5% in EBITDA, and 40.5% in adjusted PAT, reaching Rs 626 crore, Rs 172 crore, and Rs 108 crore respectively between FY23 and FY25.

At the upper price band of Rs 1,065, the IPO is valued at a FY25 price-to-earnings (P/E) ratio of 35.8x and an EV/EBITDA multiple of 22.4x, based on the post-issue capital. Despite operating in a capital-intensive industry, the company maintains strong returns with a return on equity (RoE) of 17.4% and return on capital employed (RoCE) of 19.1%.

However, compared to its peers, the IPO is priced at a premium. Therefore, SBI Securities maintains a NEUTRAL stance on the issue and recommends monitoring the company’s performance after listing before making a decision.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)