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Valencia India coming with IPO to raise upto Rs 49 crore

The issue will open on June 26, 2025 and will close on June 30, 2025

Valencia India

  • Valencia India is coming out with an initial public offering (IPO) of 44,49,600 equity shares in a price band Rs 95-110 per equity share.
  • The issue will open on June 26, 2025 and will close on June 30, 2025.
  • The shares will be listed on SME Platform of BSE.
  • The face value of the share is Rs 10 and is priced 9.50 times of its face value on the lower side and 11.00 times on the higher side.
  • Book running lead manager to the issue is Interactive Financial Services.
  • Compliance Officer for the issue is Twinkle Rathi.

Profile of the company

Valencia India is a diversified business conglomerate with operations both in India and internationally. In India, it has a strong presence in the real estate and construction sectors, while globally, it is actively engaged in the expansive export and import of both food and non-food products. The company is committed to delivering efficient and dependable cross-border trade services. Additionally, its growing trading vertical in FMCG, agro, and dairy commodities -particularly in the Middle East- complements its already established ventures in the hospitality and resort industry.

Basil Buildcon Private Limited, a company promoted by Keyur Patel had developed a Resorts named as a 'Valencia Club Abu' resort, located in the beautiful surroundings of Foot Abu Road, Sirohi, Rajasthan, offers a unique getaway from everyday life. The resort furnished accommodations and a range of amenities, including restaurants, spas, kids' clubs, and various holiday activities.

The developed club has been given on leasehold basis to issuer Company in the year 2017. The operation and maintenance of the club was the responsibility of the Valencia India Limited formerly known as Valencia Country Club Private Limited. The agreement covers a Club Building and its surrounding areas, which include an Admin Office, Multi-Purpose Hall, Restaurant, Kitchen, Swimming Pool, Changing Rooms, Spa and Gym, Banquet Area, Six Residential Rooms, and a Party Lounge.

Proceed is being used for:

  • Development of 15 Villas and club house
  • General corporate purpose 

Industry Overview

India is ranked 10th among 185 countries in terms of travel & tourism’s total contribution to GDP in 2019. The contribution of India’s travel and tourism sector to India’s economy was worth $199.60 billion in 2022. The Indian travel and tourism industry is expected to record an annual growth at 7.1% per annum. India’s Travel and Tourism GDP contribution grew by 5.9%. The travel market in India is projected to reach $125 billion by FY27 from an estimated $75 billion in FY20. The Indian airline travel market was estimated at $20 billion and is projected to double in size by FY27 due to improving airport infrastructure and growing access to passports. The Indian hotel market including domestic, inbound, and outbound was estimated at $32 billion in FY20 and is expected to reach $52 billion by FY27, driven by the surging demand from travellers and sustained efforts of travel agents to boost the market.

Meanwhile, the market size of the hospitality industry in India is projected to be approximately $24.61 billion in 2024 and is anticipated to reach $31.01 billion by 2029. The projected growth is anticipated to occur at a compound annual growth rate (CAGR) of 4.73% throughout the forecast period of 2024-29. The Indian hotel industry is on the verge of exponential growth, with projections indicating a 7-9% revenue increase in FY2025. This surge is driven by the surging demand for domestic leisure travel, along with a rise in events like weddings and business travel. ICRA anticipates occupancy rates will reach their highest in a decade, fuelled by growing interest in tier-II cities and spiritual tourism destinations. Premium hotel occupancy rates are predicted to hover at 70-72% in FY24 and FY25, with average room rates expected to reach between $94.06 and $96.47 (Rs 7,800-8,000) in FY25.

Staycation is seen as an emerging trend were people stay at luxurious hotels to revive themselves of stress in a peaceful getaway. To cater to such needs, major hotel chains such as Marriott International, IHG Hotels & Resorts and Oberoi hotels are introducing staycation offers where guests can choose from a host of curated experiences, within the hotel. India’s travel and tourism industry has huge growth potential. The industry is also looking forward to the expansion of e-Visa scheme, which is expected to double the tourist inflow in India. India's travel and tourism industry has the potential to expand by 2.5% on the back of higher budgetary allocation and low-cost healthcare facility.  

Pros and strengths

Delivery of quality family holiday experience: Valencia Abu focuses on providing a high-quality family holiday experience, offering a range of family-friendly amenities. The club features spacious villas, recreational facilities, and diverse dining options that cater to the needs of all family members. With attractions such as a swimming pool, spa, gym, multi-purpose hall, and family lounges, guests can enjoy both relaxation and fun. Valencia Abu also offers personalized services, including customized holiday packages and special family events, ensuring a hassle-free and enjoyable stay.

Exceptional service: The company takes pride in providing personalized and attentive service. Its staff is trained to anticipate guests’ needs and offer customized solutions, ensuring their satisfaction and loyalty.

Strength in RCI affiliates: Its partnership with RCI greatly strengthens the company by giving it access to a global network of vacation exchange options. This expands its offerings and broadens its reach. The connection with RCI also enhances its credibility, making it more appealing to potential clients and partners. By leveraging RCI's strong reputation and resources, this alliance supports its growth and helps it to stand out in the competitive market. Its members can also avail the benefits of enjoying resorts of RCI under the exchange programme.

Risks and concerns

Relying on club Mahindra for its rent income: The company has executed an agreement to lease with Mahindra Holidays and Resorts India (Club Mahindra) on December 27, 2023 for a term of 20 years and upon expiry of the term the lease shall be renewable for such further period as may be mutually agreed between both the parties with a Lock in Period of 5 years. As per the terms, if the lessee chooses to terminate the lease after the 5-year lock-in period, the company will only receive rental income during the lease period and will not be entitled to any share in the revenue generated from the villas managed by Club Mahindra. In the event of such early termination, the company would lose its rental income and would be required to re-market the resort. This transition period could significantly impact the company’s profitability and liquidity until a new tenant is secured.

Business is seasonal and its revenue is highly volatile: The company’s business is seasonal business. Generally, summer is a peak season for its business because tourist preferred to go to hill station or resort during summer to overcome the problem of heat of the summer temporarily and in addition to this their children will have summer vacation during summer. Similarly, Diwali vacation and Christmas vacation, it is having heavy demand for reservation. Thus, in peak season of summer Vacation, Diwali vacation and Christmas vacation, it is having almost full occupancy and it is not able to meet with the demand of the customer for room booking. On the other hand, during winter and monsoon season, the demand for its rooms is very limited and occupancy ratio will be very low. Its income from restaurant and other activities will also be decreased considerably. Thus, its occupancy and income will be high during summer and festival season and very much low during off season like winter and monsoon and consequently its income, profitability will be highly volatile during the different seasons.

Stopped enrolling new members for its resorts: Until now, the company has been enrolling new members for its club and resorts. However, following the execution of a long-term lease agreement with Mahindra Holidays and Resorts India Limited (Club Mahindra) on December 27, 2023, for a 20-year term (with the option for renewal at the end of the term, subject to mutual agreement, and a 5-year lock-in period), it has strategically decided to discontinue enrolling new members from the next year. Existing members will still enjoy the same services and benefits as per the previous terms. As a result of ceasing new member enrolments, the growth of its business may be impacted.

Outlook

Valencia India is a diversified business conglomerate with operations in India and overseas. The company has a significant presence in the real estate and construction industry, focusing on developing residential apartments, bungalows, malls, multiplexes, commercial spaces, and offices. The company has strength in RCI affiliates and it has experience of the promoter. On the concern side, the company has entered in to lease agreement for term of 20 years and upon expiry of the term the lease shall be renewable for such further period as may be mutually agreed between both the parties with a Lock in Period of 5 years with Mahindra Holidays and Resorts India Limited (Club Mahindra). In case the Club Mahindra terminate the lease agreement after Lock in period of 5 years, the income, profitability of the company will be adversely effected.

The company is coming out with a maiden IPO of 44,49,600 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 95-110 per equity share. The aggregate size of the offer is around Rs 42.27 crore to Rs 48.95 crore based on lower and upper price band respectively. On performance front, in the FY24, the company’s total revenue was Rs 711.49 lakh, which is increased by 36.12% in compare to total revenue from operations of Rs 522.70 lakh in FY23. Moreover, the company’s profit after tax is Rs 194.05 lakh for the FY24 in compared to Rs 55.85 lakh in FY23. 

The company is actively pursuing the acquisition or lease of additional villas to significantly enhance its partnership with Club Mahindra. Its goal is to increase the current capacity from 100 keys to 300 keys. This expansion will not only strengthen its collaboration with Club Mahindra but also enable it to broaden their business reach and offerings. By scaling up the number of keys, it aims to provide more accommodation options, attract a larger customer base, and boost overall growth and success for both parties involved.