Valencia India Limited

Red Herring Prospectus dated July 01, 2025

Summary

Valencia India Limited is proposing to raise ₹48.95 crore through the IPO: ₹44.00 crore from a fresh issue of shares and ₹4.95 crore through an offer for sale by existing shareholders. The price is ₹110 per share.

About 84% of the amounts stated for the objects go to development of 15 villas and club house, and about 16% to general corporate purposes.

The review found 9 points to read closely and 19 worth checking.

Read closely

1. Criminal proceedings against the company, its directors or individual promoters
2. Land or assets bought from related parties
3. Shares issued shortly before the IPO at a deep discount to the issue price
4. Low promoter holding after the issue
5. Physical capital expenditure rests on quotations with no orders placed
6. No independent monitoring of proceeds
7. Issue is large relative to the existing business
8. Profit jumped in the year before the IPO
9. Weak liquidity

How the capital was built

• The last priced issue of shares was on 5 Mar 2024: 20,000 shares to promoters and others at ₹3,000 each (₹10 in today's shares) (4 allottees), 66.7% of the pre-issue capital, at 300 times the price of the previous issue about 5 years earlier; it came 16 months before this prospectus.
• From the first priced issue (on incorporation, ₹0.033 in today's shares) to the last, the price per share rose 300 times over 5 years.
• The price band of ₹110 to ₹110 is 11.00 to 11.00 times the last issue price.

Conclusion

Of the 9 points to read closely, 4 concern the promoters, management and their dealings (criminal proceedings against the company, its directors or individual promoters; land or assets bought from related parties; shares issued shortly before the IPO at a deep discount to the issue price; low promoter holding after the issue), 3 concern how the IPO money will be spent and 2 concern the financial statements. These could not be scored automatically and need reading: guarantees given for group entities; companies share an address with the issuer or with each other; promoters have limited experience in this business.