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Midwest Limited Q1 FY27: Growth from Granite, Quartz Ramping Up, and Bigger Bets in Rare Earths

Midwest Limited began FY27 with a strong operating quarter. Consolidated net revenue for Q1 FY27 rose to INR 191.84 crore, up 34.85% year-on-year. EBITDA increased 25.40% to INR 48.87 crore, while profit after tax grew 27.31% to INR 31.04 crore.

The quarter also highlighted the company’s transition narrative. Granite remains the core profit engine, but quartz is moving from commissioning to ramp-up. Beyond that, management continues to position Midwest for a broader materials platform through rare earths and heavy mineral sands, with projects in Sri Lanka and a new Indonesia MoU that could open access to heavy rare earth deposits.

Q1 performance: strong growth, margins pressured by diesel

The year-on-year growth was broad-based at the consolidated level, but margins softened. Q1 FY27 EBITDA margin was 25.47%, lower than 27.39% in Q1 FY26. PAT margin also moved down to 16.18% from 17.14%.

On the earnings call, management linked the pressure primarily to diesel price volatility. Diesel is a significant cost head for the company, and management stated that diesel prices moved from around INR 85 per litre to about INR 125 to 130 per litre during the period. Despite this, Midwest delivered a strong year-on-year increase in revenue and profits.

A key structural positive highlighted in the investor presentation was a renewable power tie-up for mines under a group captive arrangement. The company stated this should generate savings of roughly INR 2 per unit of electricity, which is relevant as management continues to push electrification and energy optimization initiatives.

Note: All numbers are on consolidated basis, as stated in the presentation.

Granite remains the base, quartz is the near-term growth lever

Midwest’s historical earnings profile has been driven by granite. The investor presentation states that over FY23 to FY26, 96% of revenue came from the primary business of selling granite blocks, particularly Absolute Black and Black Galaxy. Operations include 16 operational granite mines, along with processing and distribution across 17 countries and 5 continents, with key markets including China, Italy, and Thailand.

Granite demand commentary on the call was constructive. Management said demand is good, pricing realization improved, and the company has taken price increases in granite. In a discussion on pricing, management indicated the hike was in the range of about 3% to 5%.

Quartz is the newer platform and is now entering the scaling phase. On the earnings call, management said Q1 FY27 quartz revenue was about INR 5 crore, with approximately 5,000 tons sold in the quarter. Realisation in quartz was stated at around INR 10,000 per ton.

The ramp-up plan was given in operating terms. Management guided that the company is targeting a run rate of 10,000 tons per month by the end of the current quarter, 10,000 to 12,000 tons per month in the next quarter, and exceeding 15,000 tons per month in Q4 FY27. Management also stated that the current plant can go up to around 18,000 tons per month, with 15,000 tons per month being an optimum average target.

There was also a transparent revision to earlier volume expectations. In response to a question, management said that an earlier FY27 run-rate expectation of 150,000 tons is being revised to about 120,000 tons due to production challenges faced in the previous quarter, which they said have since been addressed.

Capex and capacity: Phase II and HPQ line pulled forward

The company’s capex roadmap is central to its transition. The investor presentation states that management has planned to add the High Purity Quartz line along with Quartz Phase II instead of the initial plan of Phase III.

On the call, management guided quartz capex of around INR 125 crore, split between FY27 and FY28. They indicated that roughly INR 60 to 70 crore could be spent over Q2 and Q3, with the balance planned for Q4 or early next fiscal year. Phase II commissioning was guided within 10 to 12 months, with management noting they are exploring alternate sourcing options because some machinery was earlier expected from China.

Beyond quartz, the company’s longer-duration bets include rare earths and heavy mineral sands.

In Sri Lanka, Midwest has secured four exploration licenses. Management stated that a policy delay had created roughly a six-month delay, but the policy is now finalized and ratified. The company has received formal communication to reconfirm production, investment and timelines, which management described as the final milestone before receiving the eventual license. Management said they could break ground around October, followed by 12 to 15 months for plant build-out and start operations. Plant capex for Sri Lanka was stated at around INR 120 crore.

However, management also set expectations that the Sri Lanka project is still in the licensing stage, and they are estimating contributions only in FY29, not FY28.

Indonesia MoU: access to heavy rare earths, but still early

A major strategic highlight in Q1 FY27 was the MoU signed with Indonesia’s state-owned PERMINAS, alongside Midwest Energy Limited and NFDC, to collaborate on the critical minerals and rare earth value chain, including rare earth magnet manufacturing.

Management provided more detail on the call. They explained that India’s monazite deposits mainly provide light rare earths, while heavy rare earths such as dysprosium and terbium are available only in limited geographies. Indonesia has ionic clay deposits which management described as a source of heavy rare earths.

On timeline, management said the MoU could likely be converted into an agreement during the current quarter, with JV formation expected next quarter. From JV formation, they suggested 12 to 15 months for plant build-out and operations. Management also noted capex for the Indonesia project is expected to be higher than Kerala because it is an overseas project and involves mining clay from the earth before processing.

The structure being discussed includes two separate JVs. Management said the first JV would be from mine to oxide, where Midwest Limited would contribute. A second JV from oxide to magnet would be more capital intensive and could involve Midwest Energy.

At this stage, management stated that the project report is still being prepared, and capex numbers would likely be shared in a future update once the work is complete.

FY27 guidance: revenue ramp aided by quartz

Management provided a numerical revenue estimate for FY27. They guided consolidated revenue at around INR 840 crore, compared with FY26 revenue of INR 645.62 crore.

They also gave a directional split: around INR 720 crore from granite and around INR 100 to 120 crore from quartz. On margins, management indicated granite EBITDA margins should stay broadly in line with previous years, with potential 50 to 100 basis points of variation. They also flagged that quartz in its first stabilization year could have a weighted impact on blended EBITDA in FY27.

Looking ahead, management discussed that quartz Phase I could generate around INR 180 to 200 crore revenue in FY28 at a 15,000 tons per month run rate. They also suggested that quartz EBITDA could be around 30% or a little above 30% at scale, with blended EBITDA potentially around 29% to 30% in FY28, though this is dependent on stabilization and volumes.

Takeaways

Midwest’s Q1 FY27 results reinforced the near-term strength of its core granite franchise, while also showing the early shape of its next growth leg in quartz. The quarter did include margin pressure, but management attributed it to diesel volatility and highlighted multiple mitigation levers such as price actions, electrification and renewable power sourcing.

Strategically, the company is building optionality in rare earths and heavy mineral sands through Sri Lanka and Indonesia, but management commentary makes it clear these are still early-stage and dependent on licensing, agreements and build-out timelines. For FY27, the operational focus appears to be clear: defend granite profitability, ramp quartz volumes to profitability, and keep long-cycle projects moving through approvals and structuring.