Midwest Share: Can Quartz And Rare Earth Ambitions Unlock Opportunities In Semiconductors? 

Synopsis: Midwest is transforming from a granite-focused company into a diversified minerals player through investments in quartz, high-purity quartz, rare earth oxides, and heavy mineral sands. With exposure to solar, semiconductor, and magnet supply chains, the company aims to leverage new growth opportunities while maintaining stable earnings from granite operations. 

Midwest Limited has built its reputation in premium black granite over several decades now; however, FY26 marked the start of something new for the company. Although granite continues to dominate the Midwest’s revenue stream, the management is concurrently working towards HPQ, quartz processing, HMS, and rare earth oxides. 

This move will help the company cater to growing demand from emerging industries like solar glass, semiconductors, permanent magnets, and advanced manufacturing. During its recent earnings release, the company pointed out many achievements, including starting quartz production, expansion phase 2, being selected by KMML in the rare earth project, and progressing towards HMS projects. 

All of these projects could change the revenue profile of Midwest in the coming years. With a market cap of Rs 4,500 crore, the shares of Midwest Ltd are trading at Rs 1,259 and are trading at a PE of 43 compared to their industry’s PE of 38. 

Granite Remains the Foundation of the Business 

Even with increasing attention to newer mineral categories, granite continues to form the core of the Midwest’s operations. In FY26, the company recorded a consolidated income of Rs 645 crore against Rs 626 crore last year. According to management, there is no slackening in granite demands in either the domestic or overseas markets, where Galaxy Granite continues to experience good demand, especially in China and other international markets.

The firm was also awarded a 30-year mining lease to a Galaxy granite quarry whose production is already underway and has added revenue to the company’s account. It is expected to yield roughly 10,000 to 12,000 cubic metres annually, generating revenues worth Rs 70 to 80 crore for Midwest each year. This acquisition has further strengthened Midwest’s resource base, as the company expects to grow annual granite output by 10% to  12% annually.

There have also been changes in export avenues. For example, countries such as Algeria and Egypt have started importing granite blocks as opposed to finished slabs, thus opening up new possibilities for the company in terms of growth without making any substantial investments.

Operational Efficiency Supports Margin Stability 

However, the margins in granite operations have been relatively robust, despite the challenges posed by inflationary forces and increasing fuel prices. According to management, there are a number of measures aimed at controlling costs which have contributed towards profitability. 

In terms of a stand-alone sector, granite’s EBITDA margin has gone up to 27.55% from 27.43%, whereas the PAT margin has risen to 17.47% from 17.17%. A major area of focus involves switching from fossil fuels to renewable energy sources and electrification. The Midwest is implementing solar energy solutions as well as transforming some of its mining operations into an electric vehicle fleet. The reason is that energy accounts for a huge part of the company’s operating costs.

Furthermore, there have been price hikes in exports to the tune of 4% among customers. Taking into consideration the Midwest’s favorable export structure and currency support, it will be possible to counter inflation through these initiatives.

Quartz Business Finally Moves into Commercial Production 

The key operational highlight in FY26 was the stabilisation of the quartz plant and starting its commercial production. There were some initial technical issues which delayed scale-up last year, but the management has confirmed that currently the plant is in full production mode.

The capacity of the plant is estimated at around 300,000 tonnes, while its optimal utilisation is 240,000to 250,000 tonnes. There has been a rapid ramp-up from 2,000 tonnes in one month to 10,000 tonnes per month in the next quarter.

Management’s goal is to use 60% of effective capacity in FY27, or roughly 150,000 tonnes. With improved efficiency, fixed cost pressure seen last year during the stabilization phase should become less of an issue.

The quartz division was a negative factor for consolidated profitability last year as depreciation and operating costs were expensed even though no revenues had yet been generated. Management sees this drag going away gradually with increased utilisation and sales volume.

Addressing Solar Glass and Engineered Stone Markets 

The quartz strategy adopted by Midwest is well suited for two end-use sectors: engineered stones and solar glass. The main focus of phase one processing of the factory was a product mix where engineered stones were favoured over solar glass with an approximate ratio of 70:30.

Currently, Midwest earns an average of Rs 7,000 per tonne for the solar grade, while engineered stones fetch prices from Rs 9,000 up to Rs 14,500 per tonne. In such a scenario, management gets the flexibility to plan its product mix according to market circumstances.

Phase 2 is expected to take a different approach and will have about 70% of the product destined for solar glass and only 30% for engineered stones. This approach is reflective of management’s belief in the future growth of solar demand driven by investments in renewable energy sources. Management have also mentioned that their plant configuration has enough flexibility for planning and altering their product mix based on market conditions.

High-Purity Quartz Opens the Door to Semiconductor Opportunities 

In addition to traditional quartz operations, Midwest is planning to venture into the much more sophisticated high-purity quartz market. Indeed, the production of HPQ has been included in the second phase of development, and management estimates the plant should be commissioned in 10-12 months.

It was indicated that HPQ was a specialty material used in semiconductors, solar crucibles, and a range of other industrial applications. Management expects it will become one of the few producers globally capable of providing HPQ material.

A comprehensive range of testing, resource assessment, and process development had already been conducted. It is reported that deposits are according to international standards and customer relations are developing in a positive manner.

The first stage of production capacity for HPQ is estimated at 20,000 tonnes per year. While the volume is rather small, management believes that HPQ represents significantly more valuable material than common quartz materials. Moreover, Midwest expects its resources might be sufficient to significantly expand production in the future.

Management believes that most of the first buyers of HPQ would come from China, specifically crucible makers serving the solar industry. By shortening logistics and selling directly to customers, Midwest aims to improve efficiency and increase competitiveness.

Rare Earth Oxides Could Become a Strategic Growth Pillar 

One key highlight during the quarter was that Midwest had been chosen as a consortium partner by Kerala Minerals and Metals Limited for setting up a rare earth oxide project. The company is expected to spend about Rs 20 crore on the project, which is anticipated to run for a period of six months starting from FY27.

Management stated that this was a landmark decision for the company since it marked one of the very few attempts made by the private sector to be part of the monazite-based rare earth processing value chain within the country. The emphasis was on developing rare earth oxides, as opposed to end-product magnets.

This decision gains its importance due to the efforts taken by the Indian government to create a domestic supply chain for permanent magnets in the country. According to management, demand for rare earth oxides is likely to grow considerably due to the capacity created for magnet production through production-linked incentive schemes.

Following successful pilot production operations, management expects quick actions towards setting up a plant. This could happen at a commercial level once the plant is developed, with construction estimated to take about a year after the pilot phase.

Heavy Mineral Sands Add Another Long-Term Opportunity 

The ambitions of the Midwest do not stop at quartz and rare earths alone; they are looking at ventures in heavy mineral sands. The management has indicated that work on projects in the exploration and pre-production phases has been completed, waiting only for policy approvals from the government so that they can move on to mining licences and construct plants.

These minerals include such elements as ilmenite, rutile, and monazite. The first two minerals have well-established uses in industrial processes, but the third is used as the raw material for extracting rare earth oxides.

The vertical is considered very attractive by the management owing to its longevity and being aligned with the requirements of future industries. Experience that the company has in mineral processing along with its knowledge from the KMML project may help the firm get an edge when private companies are allowed in the sector.

A Vision of Diversified Growth 

The vision of management indicates a drastic move from its existing conventional granite products into other minerals. In the coming three to four years, the target for the firm is to achieve a growth rate of up to 2.5 times in terms of revenues.

Organic growth and mining leases will ensure steady growth in granite operations. Revenues of around Rs 400 crore can be contributed by quartz (HPQ). The revenues from the Sri Lankan project will be around Rs 350to Rs 400 crore, and KMML’s rare earth oxide project will add revenues of about Rs 200 crore.

All of the above-mentioned initiatives indicate that Midwest has changed its business outlook in a major way. From being an exporter of granite, the firm will emerge as a processor of diverse minerals related to solar energy, semiconductors, rare earth metals, and so on.

While execution risks remain, particularly in new businesses that are still under development, the strategic direction is becoming increasingly clear. Granite provides a stable cash-generating base, while quartz, HPQ, rare earth oxides, and heavy mineral sands offer pathways into industries expected to benefit from global energy transition and technology manufacturing trends. 

If management successfully executes these projects, Midwest’s next phase of growth could be driven as much by advanced industrial minerals as by the granite business that built the company. 

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.

The post Midwest Share: Can Quartz And Rare Earth Ambitions Unlock Opportunities In Semiconductors?  appeared first on Trade Brains.