What Is a DRHP?
A DRHP, or Draft Red Herring Prospectus, is the preliminary offer document a company files with SEBI before an IPO. It describes the business, the financials, the risk factors, and where the money raised will go, but leaves out the final price and the exact number of shares. For a Research Analyst, it is the primary source for everything you put in an IPO note.
Educational, not investment advice. This explains what a DRHP is and how it is read. Nothing here is a recommendation on any specific issue. Verify filing requirements against SEBI's current rules.
The short definition
When a company in India wants to raise money from the public through an IPO, it cannot just open the issue. It first files a draft offer document with SEBI for review. That document is the DRHP. The "red herring" part comes from a red disclaimer on the cover saying the document is not final and may change, because the price and the exact share count are still missing. The "draft" part marks it as the version SEBI vets before anything goes to market.
In plain terms: the DRHP is the company introducing itself to the regulator and the public, with the numbers and the risks on the table, but without the price tag yet.
What a DRHP contains
The DRHP is long, and it is meant to be. Everything material in a credible IPO note should trace back to it. These are the sections that matter most.
Business and industry
What the company does, the market it operates in, its competitive position, and how it makes money. This is the story you will test against the numbers.
Financials
Audited statements over the disclosed years: revenue, profit, margins, debt, and cash flow. Read the trend and the quality, not just the headline growth.
Risk factors
The section where the company is required to be honest about what could go wrong: customer concentration, litigation, regulatory exposure, promoter dependence. Read it closely.
Objects of the issue
Where the money goes. Fresh capital into the business is different from an offer for sale where existing holders cash out. The split matters.
Promoter and shareholding
Who owns the company before and after the issue, promoter background, and any related-party dealings that could shape incentives.
DRHP vs RHP: what changes
The two documents are easy to mix up. The DRHP is the draft filed with SEBI for review. The RHP, the Red Herring Prospectus, is the updated version filed with the Registrar of Companies just before the issue opens, after SEBI has given its observations. The RHP folds in those observations and adds the price band and the issue dates.
The one-line version: the DRHP shows you the company; the RHP shows you the price. You can do most of your fundamental work on the DRHP and slot in the valuation once the price band lands in the RHP.
Where to find a DRHP
DRHPs are public documents. SEBI publishes them under the public-issues section of its website. The exchanges, BSE and NSE, host them too, as do the lead merchant bankers running the issue. Read it from one of these primary sources, not from a summary article. The detail an analyst actually needs, the full risk factors, the basis-for-price reasoning, the related-party dealings, only lives in the filing itself.
How an analyst reads one for an IPO
For a Research Analyst, the DRHP is step one of the IPO read. The pattern is consistent: start with the objects of the issue (is the money going into the business, or to selling shareholders?), check the financials for trend and quality rather than headline growth, then read the risk-factors section closely because that is where the company is required to be candid about what could go wrong.
Valuation comes after, once the RHP carries the price band, and it gets tested against listed peers on the same basis. Throughout, the discipline is the same one that protects you: reason from the offer document, not from subscription numbers or grey-market chatter. The full step-by-step lives in our framework for evaluating IPOs.
FAQ
What is a DRHP in full?
DRHP stands for Draft Red Herring Prospectus. It is the preliminary offer document a company files with SEBI when it wants to raise money from the public through an IPO. It carries the business description, financials, risk factors, objects of the issue, and promoter and shareholding details, but not the final price or the exact number of shares. SEBI reviews it before the issue can proceed.
What is the difference between a DRHP and an RHP?
The DRHP is the draft filed with SEBI for review. The RHP, or Red Herring Prospectus, is the updated version filed with the Registrar of Companies just before the issue opens, after SEBI gives its observations. The RHP incorporates those observations and adds the price band and issue dates. The DRHP shows you the company; the RHP shows you the price.
Where can I find a DRHP?
DRHPs are public. SEBI publishes them under the public-issues section of its website, and the exchanges (BSE and NSE) and the lead merchant bankers host them too. Always read the document from one of these primary sources rather than a summary article, because the detail you need for analysis (the risk factors, the basis for price, related-party dealings) only lives in the full filing.
Why is it called a red herring prospectus?
The name comes from a red disclaimer on the cover stating that the document is not complete and may change, because the final price and share count are still missing at the draft stage. It is a long-standing convention in securities law. The "draft" prefix marks the version filed with SEBI for review, before the issue is cleared to open.