Midwest LtdQ3 FY25
Midwest Ltd
Q3 FY25 Earnings Call Analysis
Management growth scorecard
Revenue
Category 2
Margin
Category 1
Fundraise
Yes
Order
N/A
Capex
Yes
3 of 4 growth signals are positive.
Full analysisRevenue guidance
Category 2- →Granite segment expected to maintain consistent growth similar to past years.
- →Quartz business to contribute revenue starting FY26 with Phase 1 production; Phase 2 to be commissioned by FY27.
- →Quartz capacity utilization targeted at 60-70% during FY26, increasing to 80-85% in FY27.
- →Expansion plans include two new mines expected to add to granite volume growth, though partially in FY26.
- →Heavy Mineral Sands (HMS) and rare earth segments to start contributing revenue from FY28.
- →Overall production expected to more than double in coming years due to expansion projects.
- →EBITDA margin expected to improve, driven by new segments addition; target ROCE around 35% in 3-4 years.
- →Revenue from quartz Phase 2 and HMS funded via IPO and internal accruals, respectively, enhancing growth prospects.
Margin guidance
Category 1- →Midwest Limited aims for consistent revenue growth in the granite segment, maintaining past growth rates.
- →Quartz business capacity utilization expected to reach 60-70% in FY26 and 80-85%+ in FY27, driving revenue growth.
- →New verticals like quartz and HMS (Heavy Mineral Sands) anticipated to improve margins beyond the current 28%-29%.
- →Rare earths and HMS projects expected to start contributing revenues and EBITDA within 15-20 months with EBITDA margins north of 35%.
- →The company aspires to achieve an average Return on Capital Employed (ROCE) of 35% in the next 3-4 years.
- →Phase 2 expansions and rare earth processing likely to enhance bottom-line with ROEs exceeding 25%.
- →Operational efficiencies, solar power use, and electric trucks to reduce costs and improve profitability.
- →Overall, strong earnings and EPS growth expected driven by capacity expansions, technology integration, and entry into high-margin products.
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Fundraise plans
Yes- →No explicit mention of new fundraising through debt or equity in the transcript.
- →Current debt stands at approximately INR 120 crores with a capital gearing ratio of 0.38 times.
- →IPO proceeds of INR 250 crores raised earlier are being used for Phase 2 quartz expansion, electric trucks, solar integration, and debt repayment (INR 50+ crores toward repayment).
- →Future capex plans (Quartz Phase II and Heavy Mineral Sands plant) are expected to be funded partly from IPO proceeds and internal accruals.
- →Management indicates they will take appropriate calls on debt to support growth but no specific plans for fresh fundraising announced.
Order book
The transcript does not explicitly mention the current or expected order book or pending orders for Midwest Limited. However, some insights can be inferred:
- The company is ramping up production in new segments like quartz and heavy mineral sands, indicating upcoming order fulfillment capacity.
- Projects like the HMS facility and rare earth oxides processing are on track to be commissioned within 15-20 months.
- The quartz Phase II plant and heavy mineral sands plant are expected to contribute significantly in FY27 and FY28.
- Ongoing agreements and MOUs are being discussed for rare earth monazite processing with Kerala-based entities.
- No specific numerical data on order book or pending orders is provided in the available transcript pages.
Capex plans
Yes- →Commissioned Phase 1 Quartz plant with 3,03,000 tons per annum capacity; Phase 2 planned for FY27 with similar capex (~INR125-130 crores).
- →Heavy Mineral Sands (HMS) plant to be built starting next quarter, funded from internal accruals; expected commissioning within 15 months.
- →Solar energy plants being installed near mines; 1 MW plant operational, additional units to be operational by next half of the year to reduce energy costs.
- →Transition to electric vehicles for mining trucks, expected savings of INR20 lakhs per truck annually.
- →Capitalization of around INR100+ crores done so far from IPO proceeds; remaining capex for capacity doubling and solar planned mainly within next 12-15 months.
- →Received Letter of Intent from Kerala Mines and Minerals Limited for a pilot Monazite cracking project with plans for commercial plant.
- →Strategic investments targeting rare earth materials, HMS, and high purity quartz verticals aiming 2.5x revenue and 35% ROCE over 3-4 years.
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