Granite beats guidance, but margin heat delays growth inflection
Midwest's granite segment delivered 30%+ growth, smashing prior 10-12% guidance. But diesel costs (up 52% YoY) compressed EBITDA margins 190 basis points, and quartz—the quarter's marquee ramp—is already behind target, pushing meaningful diversification revenue into FY29.
₹191.8 Cr
Granite 97%, Quartz 3%
₹31.0 Cr
NPM 15.7%
25.5%
Down 190 bps YoY due to diesel
~30% YoY
Beat 10-12% prior guidance
On the surface, Midwest delivered a solid quarter: ₹191.8 Cr in revenue, granite segment up 30%+ year-on-year. Yet there is no sense of inflection in the market. The stock is down 38% from its all-time high and below all major moving averages despite strong operational delivery. The reason lies in what happened to margins—and what did not happen with the company's diversification play.
Granite is the engine; it delivered
Midwest's core granite business (Absolute Black, Black Galaxy, and others) generated ₹186 Cr of the quarter's ₹191.8 Cr in revenue, growing at an estimated 30%+ year-on-year. This beats the prior guidance of 10-12% growth. Volume was up ~10% across the portfolio; pricing power held firm with 3-5% price hikes implemented. The demand driver was largely export-led, with bulk shipments to China (a seasonal phenomenon that peaks in Q4 during Chinese New Year buying). Domestic quarrying, processing, and logistics have been electrified; solar backintegration is underway. This is a company executing well on its base business.
Diesel dealt a 190 basis-point margin hit
But here is the tension: despite 30%+ revenue growth and volume expansion, operating profit margin fell to 25.5% from an inferred 27.4% in the prior-year quarter—a 190 basis-point headwind. The culprit is unambiguous: diesel costs. Diesel accounts for approximately 13% of Midwest's total cost structure. In Q1, the price per litre spiked from ₹85 to ₹130, a 52% year-on-year jump. This single input shock offset the benefit of higher volumes and realizations. Electrification of the vehicle fleet (mostly complete) and solar backintegration provide a partial hedge—covering an estimated 50-60% of the diesel exposure—but leave a material tail risk if fuel prices stay elevated.
The diesel cost is almost 13% for us as a cost head... ours were down 190 basis points, that's it in this quarter with this kind of impact.
Quartz ramp: can ₹5 Crore become ₹100-120 Crore in 9 months?
Quartz revenue in Q1 was a modest ₹5 Cr from Phase 1, representing 5,000 tonnes sold (mix of 65% engineered stone and 35% solar/industrial end-uses). Management's target for full-year FY27 is ₹100-120 Cr, implying a 20-24x ramp by the end of the fiscal year. The path: Q2 production is targeted at 10-12k tonnes, Q4 at 15k+ tonnes per month. Phase 1 is expected to reach EBITDA breakeven at 10k tonnes/month (Q3) and profit by year-end.
However, a red flag is already waving. Prior to Q1, management had guided for 150,000 tonnes of production in FY27. That target has now been cut to 120,000 tonnes—a 20% downgrade. The company blamed 'technical glitches' (resolved in Q1) but the miss raises execution credibility. If production stumbles again, the FY27 quartz target of ₹100-120 Cr is at risk, and the critical FY28 target of ₹180-200 Cr (full ramp) slips further.
35% YoY revenue growth
Reported results show YoY as 'n/a%'. Granite appears to be ~30%+ (new); quartz only ₹5 Cr (new). Headline claim unverified.
Overstated / unclear
EBITDA margin 26-27% will be maintained in FY27
Q1 delivered 25.5% OPM, down 190 bps YoY. Requires H2 recovery from diesel moderation and realization hold.
Mixed (dependent on diesel)
Quartz ₹100-120 Cr FY27 revenue
Only ₹5 Cr in Q1. Ramp to 15k tons/month by Q4 needed. Prior 150k-ton target cut to 120k. Aggressive but feasible if execution holds.
Supported but risky
Sri Lanka SMS will operate within 12-15 months of license
License still pending after 12+ months. Ground-breaking October, ops now expected FY29 (vs. prior FY27-FY28 expectation). 18-month delay.
Contradicted
Indonesia JV will form in Q2 FY27; rare earths operational in 12-15 months
MOU signed Q1; JV structure still evolving. Capex and timeline TBD 45-60 days post-call. FY29 revenue expected, not FY27-FY28.
Overstated
What changed on this call
Quartz FY27 production target: 150k → 120k tonnes (-20%)
New ventures (SMS, rare earths, Kerala) pushed to FY29 from prior 3-4 year timeline
Sri Lanka license and ops timeline: deferred 18 months to FY29
Granite guidance beaten (10-12% guidance vs. 30%+ delivered)
FY27 revenue guidance maintained at ₹840 Cr (vs. ₹645 Cr FY26, ~30% growth)
How the street is positioned
Midwest's stock closed at ₹1,144 on the day of analysis, down 38.49% from its all-time high of ₹1,859.9. It is trading below its 20-day (₹1,185.39), 50-day (₹1,248.29), and 200-day (₹1,316.9) moving averages, indicating sustained weakness. The RSI at 36.7 suggests neutral momentum, touching oversold territory.
The post-result price action tells a mixed story. On day 1 after the announcement, the stock rallied +1.14%. By day 3, the gain had contracted to +0.42%, suggesting initial enthusiasm faded. However, by day 5, the stock recovered to +2.84%, indicating a modest but sustainable bounce. The market's read: cautious optimism on granite but concern on execution risk elsewhere. Institutional flows confirm this view: FII holdings fell 0.5 percentage points (from 4.38% to 3.88%), while DII added 0.78 percentage points (from 13.78% to 14.56%). Promoter holdings remained stable at 77%+.
The debate: steady core vs. execution risk on growth
The bull case: Granite is a machine. 30%+ growth, solid ROIC, and strong cash generation. Electrification and solar backintegration are real operating leverage (hedging 50-60% of diesel exposure). Quartz Phase 1 ramp, once stabilised at 15k tonnes/month, will deliver 30%+ EBITDA margins and ₹180-200 Cr in revenue by FY28. New ventures—rare earths (4-5x margin vs. light rare earths), SMS, and Phase 2 quartz—are all accretive long-dated bets. India's self-reliance push on rare earths is a tailwind. FY27 ₹840 Cr revenue guidance is conservative; beat potential exists if H2 volume holds and fuel moderates.
The bear case: Diesel is a key margin lever: Q1's 190 bps hit despite volume growth shows the vulnerability. Electrification hedges ~50-60%; further fuel spikes compress margins below the 24-25% floor. Quartz ramping: the 150k → 120k-tonne downgrade is already a 20% miss, and ₹5 Cr to ₹100-120 Cr in 9 months leaves no room for another production miss. New ventures are all slipping: Sri Lanka license pending 12 months (ops FY29 vs. prior FY27-FY28), Indonesia capex/timeline TBD, Kerala KMML stalled on government transition. The track record is weak: all timelines pushed 18 months. If new ventures slip further, the 2.5x revenue trajectory becomes a 2025-2027 story, not a 2026-2028 story. Valuation doesn't reward patience on execution risk.
The honest read: Midwest is a steady operator, not a step-change. Granite is real: 30%+ growth, pricing power, strong cash flows. Margins are cyclical: diesel is a key lever, and the 190 basis-point hit shows how much upside evaporates when energy costs spike. Diversification is the long-dated story—rare earths, SMS, quartz Phase 2—but it is now 18 months later than prior guidance. FY27 growth (₹840 Cr) is achievable from granite + early quartz ramp, but it is not a re-rating event. The re-rating happens in FY28-FY29 if new ventures deliver, but the street is rightly discounting execution risk. For holders, this is a 'show me' story.
Diesel price volatility & margin unhedged
High13% of cost; ₹85→₹130/L spike caused 190 bps margin hit. Electrification hedges ~50-60%, leaving material exposure. FY27 margin guidance (26-27%) depends on fuel moderation; any further spike compresses margins to 24-25%.
Quartz production execution risk
High150k → 120k-tonne downgrade already signals trouble. ₹5 Cr Q1 → ₹100-120 Cr FY27 is a 20-24x ramp in 9 months. Any further miss delays FY28 target (₹180-200 Cr). This is the growth inflection; if it slips, the whole thesis moves to FY29.
Sri Lanka SMS licensing & ops delay
HighLicense pending 12+ months. Ops pushed from prior FY27-FY28 expectation to FY29 (18-month slip). ₹120-150 Cr capex deferred; ₹350-400 Cr revenue pushed 18-24 months later. Credibility on timelines is in question.
Indonesia JV capex & timeline uncertainty
MediumMOU signed but structure evolving (two JVs planned). Capex, equity % split, and timeline all TBD 45-60 days post-call. FY29 revenue expected but too early for firm commitment. Overseas project capex typically higher than guided.
China export concentration & seasonality
MediumBulk of granite exports to China; Chinese New Year drives Q4 seasonality (30-40% annual revenue). Geopolitical risk (US-China relations, tariffs) unquantified. FOB terms insulate from freight but not commodity policy.
Kerala KMML JV stalled
MediumZero activity Q1; government transition delays MD appointment. Revenue target ₹200 Cr but timeline now vague. Opportunity cost vs. Indonesia & Sri Lanka prioritization unclear.
1 · Q2 quartz production ramp (10-12k tonnes target)
Any miss extends delay into FY28. Breakeven at 10k tonnes/month is Q3 target; monitor execution vs. prior 150k → 120k-tonne downgrade.
2 · Sri Lanka license approval (expected Q3 FY27)
Still pending after 12 months. Ground-breaking targeted October. Any further slip pushes ops to FY30, compounding credibility loss on new venture timelines.
3 · Diesel price trend & margin recovery in H2 FY27
26-27% margin guidance depends on fuel moderation from Q1 peak. Track quarterly margin progression. If margins stay at 25.5% or fall further, FY27 guidance is at risk.
4 · Indonesia JV capex & structure (project report due end Sept 2026)
Watch for clarity on capital commitment, equity % split with PERMINAS, and revised FY29 revenue timeline. Any increase in capex or timeline slip affects returns profile.
5 · FY28 blended margin (quartz Phase 1 stable, Phase 2 ramp)
Acid test of diversification profitability. If quartz Phase 1 doesn't hit 30%+ EBITDA at scale, FY28 margin guidance (29-30%) is challenged.
Midwest Ltd delivered a steady quarter on granite, its core engine. But margins got squeezed by diesel, quartz ramping is already behind prior guidance, and every major new venture (Sri Lanka, Indonesia, Kerala) is now expected in FY29 or later. This is not a step-change; it is steady execution on a single lever with long-dated upside that keeps slipping. The street is right to be cautious: down 38% from ATH, below all major averages, and institutions trimming. For holders, the single number to track from here is adjusted EBITDA margin progression into H2 FY27. If management hits the 26-27% guidance range, the story resets and some valuation upside returns. If not, the stock likely stays range-bound until FY29 visibility improves on new ventures. The honest read is that Midwest is a 'show me' story—and the proof sheet starts with margin recovery and quartz ramping without further misses.
Granite export margins under watch as technical oversold triggers Q1 clarity bid
Midwest's specialization in premium granite—not cement—carries different cycle dynamics. Street bets Q1 results affirm the 16%+ net margin trajectory that has driven recent upgrades; price target ₹1,500 is contingent on delivery.
Midwest Ltd is not a cement producer—it is India's largest premium granite exporter, commanding over 60% of the country's natural stone export market. The distinction matters: unlike cement cyclicals, Midwest's margins reflect pricing power in specialty granite and export-market tailwinds. Q1 FY-2027 (Apr–Jun 2026) is the first quarter of execution against a margin trajectory that has impressed Street: EBITDA marched from 17.83% (FY23) to 27.43% (FY25), and net margins from 10.83% to 17.17% over the same span. Analysts on April 17 upgraded the stock to Hold (from Sell), citing technical improvements and valuation, but with a caveat: the ₹1,500 target is contingent on Q1 FY-2027 results affirming the margin story. The stock stands oversold (RSI 20.8 as of Aug 10) after falling 36% from its August ATH, even as technicals (weekly Dow Theory, OBV) turned mildly bullish.
What to Expect
~16–17%
On-plan would continue the TTM 16.24% run-rate; Street watches for margin floor as export prices reflect global stone demand.
~₹155–170 Cr
Q1 typically normalizes after seasonality; prior annual run-rate ₹659.78 Cr suggests quarterly average; no guidance issued.
Watch for commentary
Key swing factor—global stone demand, currency headwinds (USD/INR), and competitor pricing power.
A strong Q1 would show margin hold at 16%+ with evidence of pricing power (ASP lift or volume growth in premium segments) and strong export orderbook momentum. A weak Q1 would reveal margin slip below 15%, softer export demand, or supply chain friction affecting capacity utilization. Guidance for H1 and FY-2027 will be the read on management confidence.
On Track?
The company is tracking a multi-year margin expansion story. EBITDA marched 970 bps from FY23 to FY25; net margin improved 434 bps over the same period. Q1 FY-2027 is the first test of whether that trajectory holds through a full fiscal year or if Q1 typically carries seasonal headwinds. Management's commentary on export pipelines, capacity utilization, and capex plans for the critical minerals / rare earth ventures will signal confidence in sustained delivery.
Street View
Since Last Quarter
Three material developments since Q4 FY-2026:
1 · Critical Minerals MoU (Jul 7, 2026)
Midwest signed an MoU with Indonesia's state-owned PERMINAS and NFTDC to explore critical minerals. This signals a diversification play beyond granite and aligns with the company's rare earth ambitions (KMML partnership announced May 6). New revenue vector, but execution risk and capex timeline are unknowns.
2 · KMML Rare Earth Partnership (May 6, 2026)
Midwest selected as Lead Consortium Partner for Kerala Minerals & Metals (KMML) rare earth elements pilot project (monazite-rich tailings processing). Adds optionality to the business model but remains pilot-stage. Cash burn and timeline material risks.
3 · Promoter Share Transfers (Apr 24–27, 2026)
Promoter Rama Raghava Reddy transferred 14.09M shares (3.90%) to immediate relative Kollareddy Ranganayakamma via gift. Reduced his stake from 64.10% to 60.21%. Routine succession event; no negative signal. Promoter group ownership remains 77.12% (FII -0.5pp, DII +0.78pp QoQ).
What to Watch on Result Day
1 · Margin floor: does 16%+ hold?
The bull case hinges on net margin persistence above 16%. Any slip below 15% would trigger Street downgrades. Export pricing, USD/INR, and mix (premium vs commodity granite) are the drivers.
2 · Export orderbook & currency impact
Management commentary on export pipelines, order backlog, and FX headwinds will determine H2 confidence. USD/INR depreciation is a 2026 headwind for exporters.
3 · Capex & rare earth timeline
KMML and Indonesia ventures remain pilot-stage. Clarity on capex commitment, timeline, and expected IRR would reset the story. No capex = de-rating; aggressive capex = optionality premium.
Midwest Ltd trades on two stories: a mature, margin-accretive granite export business (proven, 16%+ net margin run-rate) and a nascent rare earth / critical minerals optionality play (pilot-stage, capital-intensive). Q1 FY-2027 is the first live test of whether the margin story holds through a full fiscal year; Street contingency on results reflects real conviction but guarded certainty. The stock is technically oversold (RSI 20.8) and at 64% discount to its August ATH, which creates asymmetry if Q1 affirms margin trajectory. Watch for export orderbook health, margin floor, and any capex guidance on the new ventures. At ₹1,500 Street target, the bar is delivery, not hope.
Midwest Q1FY27: consolidated PAT +27% YoY on 35% revenue growth, NPM slips below 16% floor
PAT +27.3% YoY · revenue +34.8% · margins compressing · inline vs street
₹191.84 Cr
+34.8% YoY
₹31.04 Cr
+27.3% YoY
15.69%
₹8.58
Consolidated revenue came in at ₹191.8 Cr, up 34.8% YoY — ahead of the ₹155-170 Cr Street estimate range flagged in our pre-result preview — though down 11.1% QoQ from ₹215.8 Cr, a sequential dip consistent with monsoon-linked slowdowns in granite quarrying rather than any demand issue. Consolidated PAT was ₹31.0 Cr (owners'-attributable ₹29.4 Cr, +26.7% YoY, matching the figure reported in the press), up 27.3% on a total-PAT basis YoY but down 16.2% QoQ. Standalone (parent-only) PAT grew much faster at +49.7% YoY to ₹21.1 Cr on ₹98.5 Cr revenue (+25.2% YoY) — the consolidated number trails because subsidiaries, notably the still loss-making Quartz business, dilute the group print; the two are not contradictory, just different scopes, and readers will see both numbers elsewhere.
Q1 FY-2027 vs prior quarters
No year-ago quarter on record — YoY cells may be blank.
Margins were the soft spot. Consolidated NPM compressed to 15.7% from 16.7% a year ago and 16.9% last quarter, slipping below the 16% floor our pre-result preview flagged as the key metric the Street was watching. OPM (EBITDA margin) eased to 25.5% from 27.4% YoY and 27.0% QoQ. The drag traces mainly to the Quartz segment, which posted a ₹4.9 Cr PBIT loss this quarter even as its revenue scaled to ₹3.7 Cr from a near-nil base a year ago as the Phase II plant ramps, plus higher consolidated finance costs (₹3.9 Cr vs ₹3.7 Cr YoY) tied to that capex. The core Granite segment stayed healthy, with a 28.3% PBIT margin on ₹184.4 Cr of segment revenue (96% of the consolidated total).
The stock went into the print at ₹1,112.4, down 14.6% over the past month of trading.
For context: this is the second-highest quarterly PAT of the last 4 quarters.
What the summary numbers don't show
Consolidated basic EPS ₹8.58 for the quarter vs ₹7.21 a year ago and ₹10.24 in the prior quarter
Management projects a 10-12% year-on-year growth for the granite segment, aiming for INR 1,000 crores in 3-4 years. The Quartz business, with both phases and HPQ, is expected to contribute around INR 400 crores. Heavy Mineral Sands (HMS) in Sri Lanka is projected to add INR 350-400 crores, and the KMML Rare Earths proj
— This quarter: beat
On guidance, Granite segment revenue grew 35.8% YoY — well ahead of the 10-12% YoY growth management projected for the segment on the May 27, 2026 call — so the core business is tracking ahead of its own outlook even as blended margins soften. Capital deployment remains slow: only ₹70.0 Cr of the ₹229.6 Cr net IPO proceeds (30.5%) had been utilised as of June 30, 2026, with the Quartz Phase II allocation just 2.7% spent (₹3.5 Cr of ₹130.3 Cr) — a same-day regulatory filing confirmed no deviation in fund use, but the pace shows the newer growth levers (Quartz, Sri Lanka HMS, KMML rare earths) that underpin management's stated 2.5x/₹1,000 Cr three-to-four-year target remain largely unbuilt. The company also signed an MoU for critical minerals in Indonesia on July 7, 2026, extending its overseas mineral pipeline beyond the previously flagged Sri Lanka and KMML projects, with no financial contribution disclosed yet. No standalone management press release accompanied this filing beyond the routine board-outcome letter, so there is no fresh management commentary to reconcile against the print this quarter.
W1
Whether consolidated NPM recovers above the 16% floor as the Quartz ramp matures and the Q1 seasonal (monsoon) drag on Granite quarrying fades in Q2
W2
Pace of IPO proceeds deployment — only ₹70.0 Cr of ₹229.6 Cr (30.5%) utilised as of June 30, 2026, with the Quartz Phase II plant allocation just 2.7% spent
W3
Quartz segment's path to breakeven — ₹4.9 Cr PBIT loss this quarter against management's target of ~₹400 Cr eventual revenue contribution from the business
Figures reported in ₹ Millions, converted to Crore (÷10); no exceptional items or minority-interest adjustment to PBT. Consolidated PAT of ₹31.04 Cr is the P&L 'profit for the period' line (pre-NCI split); owners-attributable PAT is ₹29.40 Cr (+26.7% YoY, matching press reports) vs ₹31.04 Cr total (+27.3% YoY) — NCI (~5% of profit, mainly from the 89%-held Andhra Pradesh Granite subsidiary) explains the small gap. Standalone PAT grew far faster YoY (+49.7%) than consolidated (+27.3%), because loss-making subsidiaries (Quartz ramp-up, overseas units) drag the group number.
35% growth masks margin squeeze; diversification delayed
The verdict, the claims that held up, the sharpest analyst exchanges, and the risks — the earnings call, decoded from the transcript.
Hold
confidence 6/10
Grade B
Granite on track vs 10-12% prior guide (beat at ~30%+). Quartz off pace: 150k tons → 120k tons FY27 miss. New ventures: timelines pushed from 3-4 yr to FY29+.
Cautiously Optimistic
next 1–2 quarters
Optimistic
multi-year
Granite segment delivers robust 35% growth with strong demand, but diesel volatility (13% of cost, INR 85→130/L) compressed margins 190 bps despite electrification efforts. Quartz and new ventures—prior growth pillars—are materially delayed (Sri Lanka 18 months late, Indonesia/rare earths FY29). FY27 guidance (₹840 Cr) appears achievable but slower than prior 2.5x trajectory.
₹191.8 Cr
Revenue · +null% YoY₹31 Cr
Reported PAT · +null% YoYCompressing
Margins · vs guidance: MixedDid the claims hold up?
35% revenue growth YoY, 27% PAT growth
OVERSTATEDYoY marked n/a in results; Q1 only INR 5 Cr from quartz launch, rest from granite segment
EBITDA margin 26-27% maintained FY27
MixedQ1 delivered OPM 25.5%, NPM 15.7%; margin down 190 bps YoY due to diesel spike INR 85→130/L
Quartz 100-120 Cr FY27 revenue target
METOnly 5 Cr in Q1; ramp to 10-12k tons Q2, 15k+ by Q4. Capex ₹125 Cr Phase 2 deferred. Achievable but aggressive from 5 Cr base
Sri Lanka 12-15 months to operations post-license (expected Q3 FY27)
MISSLicense still pending despite policy finalized; ground-breaking October, ops expected FY29 (18-month delay from prior timeline)
Indonesia JV to form Q2 FY27, heavy rare earths operational timeline 12-15 months from JV
OVERSTATEDMOU signed Q1; JV structure still evolving. FY29 revenue expected per latest call. No committed capex yet.
Earnings quality
What changed since the last call
Quartz FY27 production target
DowngradePrior: 150k tons. Now: 120k tons. Reason: technical glitches resolved this quarter. Revenue impact: FY27 quartz now ₹100-120 Cr (vs prior implicit higher base).
New ventures commercialization timeline
DowngradePrior: Quartz ₹400 Cr, SMS ₹350-400 Cr, Kerala ₹200 Cr in 3-4 years (FY28-FY29). Now: Quartz ₹180-200 Cr FY28 (slower), SMS & rare earths FY29+ (18-month delay on SMS due to policy lag, KMML stalled).
Sri Lanka HMS operational start
DowngradeExpected 12-15 months from license (Q3 FY27). License still pending; ground-breaking October → operations FY29 vs prior FY27-FY28 expectation.
FY27 revenue guidance
MaintainedINR 840 Cr reaffirmed (vs 645 Cr prior year). Quartz contribution only ₹100-120 Cr (not the ₹400 Cr eventual target), rest from granite ₹720 Cr.
The Q&A
Q&A was moderately challenging. Analysts pressed hard on Sri Lanka delays, capex funding, quartz ramp vs prior guidance, and new venture timelines. Management held firm on FY27 numbers but deferred specifics on Indonesia capex/timeline to next call. Tone: cautious but defensive on execution risks.
Quartz production ramp — Arvind, Equiventure Capital
Answered5k tons Q1. Q2 target 10-12k, Q4 exceed 15k. Phase 2 capex ₹125 Cr split FY27-FY28, commission 10-12 months.
Quartz EBITDA breakeven — Archit Agarwal, Steptrade Capital
AnsweredQ3 breakeven at 10k tons/month; profit by year-end FY27. Next year optimum profitability.
Sri Lanka project timeline — Archit Agarwal, Steptrade Capital
Partial6-month delay due to policy. Ground-breaking October, 12-15 months build-out, ops expected next quarter (FY29 implied).
Indonesia MoU capex and returns — Yash Purbhe, Inved Research
PartialCapex higher than Kerala (overseas project, mining vs existing tailings). Specific number in 45-60 days (project report stage). Heavy rare earths 4-5x more margin than light. Payback typical for rare earth projects (not quantified).
FY27 quartz production vs prior guidance — Archit Agarwal, Steptrade Capital
AnsweredNo, technical glitches resolved. Now 120k tons FY27. All guidance numbers based on 120k, not 150k.
FY27 revenue guidance confidence — Alok Deora, Motilal Oswal
AnsweredConservative approach (promise less, over-deliver). Q3 rains will reduce granite production. These are conservative estimates; confident we'll beat if things go as planned.
Granite pricing power and pass-through — Alok Deora, Motilal Oswal
AnsweredAlready taken 3-5% price increase in granite. Volume growth primary lever. If fuel remains high, can take more. FOB freight always to customer.
FY28 blended margin trajectory — Alok Deora, Motilal Oswal
AnsweredPhase 1 quartz EBITDA 30%+. Blended EBITDA FY28 ~29-30% (vs FY27 lower due to quartz ramp absorption).
Sri Lanka policy and license status — Manish Gupta, Equinox Investment
PartialPolicy finalized, ratified this quarter. Formal communication received to reconfirm capacities/timelines/investment. Final project report submission Q1 FY27, license expected this quarter, development next quarter onwards.
Kerala KMML JV status — Manish Gupta, Equinox Investment
AnsweredNo activity this quarter. New government settling in, no MD appointed yet. Bureaucratic delays. Hoping once MD/team in place by Q1 FY27, activity resumes Q2 FY27 onwards.
Capex funding and leverage — Manish Gupta, Equinox Investment
AnsweredKerala is pilot (insignificant cost unless commercial plant). Phase 2 fresh equity raised (not capex). Granite capex met from cash flows. Sri Lanka ₹120-150 Cr from internal accruals. Gearing 0.2x, leverage available.
Indonesia JV structure and capital contribution — Prateek Singh, IIFL Capital
AnsweredTwo JVs planned. First: mine-to-oxide (Midwest Limited), second: oxide-to-magnet (Midwest Energy). NFPTC tech partner only. Capital between PERMINAS & Midwest Limited on first JV.
Granite volume growth by product — Prateek Singh, IIFL Capital
PartialGranite overall 32-33% revenue growth. Black Galaxy volume ~10% (both Absolute Black and Black Galaxy 10% volume).
Export freight cost pass-through (West Asia war) — Prateek Singh, IIFL Capital
AnsweredFOB basis freight always customer responsibility. Some CIF deals exist, freight passed through. Costing doesn't include freight, so impact minimal.
Q1 QoQ decline factors — Deepesh J., Manya Finance
AnsweredYes, seasonal. Q4 peak (30-40% annual revenue) due to Chinese New Year buying. Q1 typically lower. Best to compare YoY Q1 vs Q1 (up 35%).
FY28 SMS/rare earths revenue visibility — Balamurali, Oman Investment
AnsweredSri Lanka in licensing phase. License → build → operations. Estimating FY29 revenue start, not FY28. Conservative, very initial stages.
Sierra Leone subsidiary activity — Gursharan, GMA Advisors
AnsweredFormed company for local work and due diligence. No update Q1. Looked at few concessions with local issues. Minimal/no spend. Logistics only. Update next quarter if progress.
Guidance
FY27 total ₹840 Cr (vs ₹645 Cr FY26, 30% growth)
HighGranite ₹720 Cr (10-12% growth reaffirmed, beaten YoY at 30%+). Quartz ₹100-120 Cr. Q3 rains may reduce granite, but overall achievable.
FY28 target ~₹950 Cr (quartz Phase 1 ₹180-200 Cr, Phase 2 ₹40-50 Cr, granite ₹750 Cr at 10-12% growth)
MediumQuartz ramp assumption 15k tons/month runrate by Q4 FY27; requires execution. Phase 2 commissioning timeline uncertain (10-12 month window). Granite conservative at 10-12% (beat this YoY).
FY29: Sri Lanka SMS and Indonesia rare earths start contributing (no $ amount yet)
LowToo early stage. Sri Lanka license pending (expected Q3 FY27), ops FY29. Indonesia JV structure evolving, capex/timeline TBD by end FY27.
FY27 EBITDA 26-27% blended (granite 27-28%, quartz drag ~2% due to ramp overhead)
MediumQ1 OPM 25.5% (down 190 bps YoY). Management expects Q2 improvement as fuel prices moderate, electrification opex gains materialize, and realization holds.
FY28 blended EBITDA ~29-30% (quartz Phase 1 at 30%+, granite ~27-28%, Phase 2 ramp dilution <0.5%)
MediumAssumes quartz reaches stable margin profile at 15k tons/month. Phase 1 capex depreciation will be full-year impact. Granite needs to hold margin vs diesel risk.
Quartz Phase 2: ₹125 Cr split FY27-FY28 (₹60-70 Cr Q2-Q3 FY27, balance Q4-Q1 FY28)
HighSuppliers finalized, orders placed. Cash spend profile clear. Commission within 10-12 months (by Q4 FY27 likely).
Sri Lanka: ₹120-150 Cr plant capex (if license granted Q3 FY27, build 12-15 months, ops FY29)
MediumLicense still pending. Once obtained, capex from internal accruals. Timeline assumes no further delays.
Indonesia rare earths: Capex amount TBD, expected within 45-60 days of call (end Sept 2026)
LowProject report stage. Ore-to-oxide phase less capex-intensive than oxide-to-magnet. Overseas project capex typically higher. JV equity split and capex proportion unknown.
Risks the call surfaced
Diesel price volatility
HighDiesel 13% of cost. Q1 saw INR 85→130/L spike (52% increase). EBITDA down 190 bps despite 35% revenue growth. Electrification hedges ~50-60% of impact, leaves ₹20-30 Cr annual exposure if sustained.
Quartz production execution
HighQuartz Phase 1 already missed 150k tons FY27 target (now 120k). Q1 only ₹5 Cr; FY27 target ₹100-120 Cr requires 20-24x ramp in 3Q. Technical glitches 'resolved' but unproven at scale. Phase 2 commissioning (10-12 months) adds execution risk.
Sri Lanka HMS licensing delay
HighLicense pending 12+ months. Policy finalized Q1 FY27, but license not yet issued. Ground-breaking expected October, 12-15 months to ops = FY29 start (vs prior expectation FY27-FY28). ₹120-150 Cr capex deferred; revenue contribution pushed 18-24 months later.
Kerala KMML JV stalled
MediumNo activity Q1 FY27. New government settling in, MD not appointed. KMML internal bureaucratic delays. Prior target ₹200 Cr revenue; timeline now vague (pending MD/team appointment). Opportunity cost vs Indonesia/Sri Lanka prioritization.
Indonesia JV structure/capex uncertainty
MediumMoU signed but JV structure evolving (two JVs: mine-to-oxide Midwest, oxide-to-magnet Energy). Capex amount, equity % split with PERMINAS, timeline all TBD (45-60 day project report). FY29 revenue expected but too early for commitment. Rare earths margin profile attractive but execution unproven.
China export concentration & seasonality
MediumBulk of granite exports to China (61-65% engineered stone + solar segments). Chinese New Year drives Q4 peak (30-40% annual revenue). Geopolitical risk (US-China relations, tariffs) and seasonality create Q1 softness. FOB freight insulates from shipping but not commodity/trade policy.
Management
Score 7/10. Articulate and direct. Ram Kollareddy addresses all questions. Acknowledges challenges (quartz miss, Sri Lanka delay, diesel headwinds) transparently. However, some deferred specifics (Indonesia capex TBD). Tone is confident but realistic. Granite on track: 30%+ growth beats 10-12% prior guide. Quartz 150k→120k tons miss; Phase 1 ramp credible from here. New ventures delayed 12-18 months (Sri Lanka license pending, Kerala KMML stalled, Indonesia too early). Track record: good on core, weak on new venture timelines.
1 · Q2 FY27
Quartz run rate 10-12k tons, Phase 2 capex outlay ₹60-70 Cr
2 · Q3 FY27
Quartz breakeven at 10k tons/month; electrification opex benefit
3 · Q3/Q4 FY27
Sri Lanka license expected, ground-breaking October
FY27 guidance (₹840 Cr) appears achievable but slower than prior 2.5x trajectory.