The point
A draft red herring prospectus, or DRHP, is the document a company files with SEBI before an IPO, and the public gets at least 21 days to comment on it. It is called a red herring because the price and lot size are left blank. A handful of pages carry most of the information: where the money goes, who is selling, what could go wrong and who the company deals with on the side.
What is a DRHP, and who files it with whom?
A DRHP is the preliminary offer document a company files with the Securities and Exchange Board of India before it launches an initial public offering. It holds the company's history, business, audited financials, risk factors, management and promoters, and the use of the money being raised. The IPO Market guide says a filing runs to hundreds of pages. Some large companies pass 500 (source: IPO Market, What is a DRHP).
A lead manager, usually an investment bank, prepares the document with the company and files it. Regulation 26 of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 then sets the public stage. The draft is hosted on the websites of the issuer, SEBI, the stock exchanges and the lead managers. It stays open for comments for a prescribed minimum period, and a newspaper notice invites them. When the period ends, the lead managers file the comments received, and any changes that follow, with SEBI (source: TaxTMI, Regulation 26). Religare's glossary puts that minimum at 21 days (source: Religare, draft offer document).
So a DRHP is public from the day it is filed, and anyone can read one without an account or a broker. The IPO Market guide lists SEBI, NSE, BSE, the company's own IPO page and the registrar's website as places to find it.
How is a DRHP different from the red herring prospectus that follows?
The DRHP leaves certain figures blank, shown as [●], and the red herring prospectus, the RHP, fills them in. The blanks that matter most are the price band and the lot size. The RHP also carries the subscription dates and any changes SEBI asked for. The IPO Market guide says the RHP is published just before the issue opens.
That sequence settles what a DRHP can be used for. It tells you what the company says about itself and what it plans to do with the money. It cannot tell you what the shares will cost. A reader who opens a DRHP looking for a price finds a bracket of dots. A reader who waits for the price has a few days to read what the company took months to write.
Which pages are worth reading first?
Start where the seller has the least room to decorate. The business overview is written to sell, so read it last. The pages below are the ones where numbers sit next to names.
Objects of the issue
This section says what the company will do with the money it receives. Typical entries are capital expenditure, repaying debt, working capital and general corporate purposes. Read the split in percentages. A company whose proceeds mostly go to a named plant is telling you something different from one whose proceeds mostly retire old loans.
Fresh issue against offer for sale
A fresh issue creates new shares and the cash goes to the company. An offer for sale, or OFS, is existing shareholders selling shares they already hold, and the cash goes to them. Most IPOs mix the two, and the split is the first thing worth finding. An earlier piece covers what an offer for sale means for the person buying the IPO.
Here is the arithmetic on an illustrative issue of ₹10,000 crore, split ₹6,000 crore fresh and ₹4,000 crore OFS. The company receives 6,000 / 10,000 = 60 percent. The selling holders receive the other 40 percent. Now suppose the objects section sends ₹2,400 crore of the fresh money to debt, ₹3,000 crore to capital expenditure and ₹600 crore to general corporate purposes. That sums to ₹6,000 crore, and it means debt repayment is 2,400 / 6,000 = 40 percent of what the company receives.
Carry that to a ₹5 lakh bid. ₹3 lakh reaches the company: ₹1.2 lakh retires debt, ₹1.5 lakh builds capacity, ₹30,000 goes to general purposes. The other ₹2 lakh goes to the people who sold. Five lines of arithmetic turn the objects page into a picture of where your money goes.
Risk factors
Companies list their own risks, and the order is a decision they made. The risk factors section is where customer concentration, dependence on a licence, pending disputes and heavy borrowing are written down in the company's own words. Read the first ten. Ask of each risk whether it applies to this company only or to every company in its sector. A risk with a specific number or a named counterparty is information. A risk written as "our business may be adversely affected by various factors" is filler.
Related-party transactions
These are dealings between the company and businesses its promoters or directors control. Examples are rent paid to a promoter's firm, goods bought from a relative's supplier and loans between group companies. The filing lists them with amounts. Compare the amount to the company's revenue. A transaction worth 2 percent of sales is a footnote. One worth a quarter of sales is a dependency.
Outstanding litigation
The litigation section groups cases by who is involved and what is claimed, usually with thresholds for what counts as material. Look for tax disputes, regulatory proceedings against the promoters and cases that could change who owns what. The amount at stake, set against the company's net worth, tells you how much the case can matter.
Promoter holding after the issue
The capital structure pages show what the promoters hold before and after the issue. If they hold 70 percent before and 52 percent after, the OFS part of the issue is them selling. If the number barely moves, the issue is mostly fresh money. The pages also show any lock-in on promoter shares, which says how long the sellers must wait before selling more.
What can a DRHP not tell you?
It cannot tell you the price, the lot size or the dates, because those are left blank. Whether the company is worth buying at any price is left to the reader, because the document only discloses. The IPO Market guide notes that SEBI reviews the draft and may issue observations, and that the company must address them before the issue goes ahead. A change between the draft and the final document is normal, which is why reading a DRHP is a first pass before any decision.
How the shares will be received once they list is a separate question. That belongs to subscription and allotment. Earlier pieces cover what a QIB is in an IPO and what GMP means and what it cannot tell you. The DRHP itself stays on the company.
A dated instance: the fresh issue and OFS split in one reported filing
The Economic Times reported on 25 September 2026, as relayed by NiftyTrader, that Inox Clean Energy was likely to file a DRHP for around ₹10,000 crore. The issue was expected to combine a fresh issue with an offer for sale by existing shareholders. The company's earlier draft, for around ₹6,000 crore, was withdrawn on 5 December 2025 (source: NiftyTrader, Inox Clean Energy IPO plan, read 2026-10-01).
That is a useful test of the reading order above. The headline figure is the issue size. The figure a reader needs is how much of it is fresh and how much is OFS. That number sits in the offer structure pages of the draft.
The same habit, applied to an index
An investor who reads the objects of an issue before the price is doing what a crypto index investor does with a methodology. Both read the rules that decide what goes in, what stays out and when it changes, before putting money behind them. Qatobit's QSI indices are designed and rebalanced monthly on a published methodology, and the documents sit at the methodology pages. Reading the rulebook first works on any product that has one.
Frequently asked questions
What is a DRHP in an IPO?
A DRHP is the draft red herring prospectus a company files with SEBI before an IPO. It describes the business, financials, risks and use of proceeds, and leaves the price and lot size blank. The draft is open for public comment for at least 21 days.
What is the difference between a DRHP and an RHP?
A DRHP is the draft filed for SEBI review and public comment, with the price band, lot size and dates blank. The RHP fills those in and incorporates changes from SEBI's observations. The IPO Market guide says the RHP is published just before the issue opens.
Where can I read a DRHP?
SEBI's filing portal, the NSE and BSE websites, the company's own IPO page and the registrar's website all host DRHPs, according to the IPO Market guide. Reading one needs no account.
Which sections of a DRHP should I read first?
Read objects of the issue, the split between fresh issue and offer for sale, risk factors, related-party transactions, outstanding litigation and the promoter holding after the issue. Together they show where the money goes, who gets it, and what could go wrong.
Does a DRHP filing mean the IPO will happen?
A filing is a request for SEBI's review, so the IPO can still change or not proceed. The Inox Clean Energy case shows it: a draft for around ₹6,000 crore was withdrawn on 5 December 2025, and a larger one was reported as planned.
Crypto investments are subject to market risk. Not financial advice.
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