Draft Red Herring Prospectus (DRHP) in India

A Draft Red Herring Prospectus (DRHP) is the preliminary offer document that an issuer files with the Securities and Exchange Board of India (SEBI), the concerned stock exchange(s), and the SEBI-designated public repository before a book-built Initial Public Offering (IPO) or Follow-on Public Offer. The DRHP precedes the Red Herring Prospectus (RHP) in the IPO lifecycle and serves as the document on which SEBI conducts its regulatory review. Unlike the RHP, the DRHP does not contain the price band , the lot size , the subscription opening and closing dates, or the final allotment methodology; these fields are left blank or indicated as “to be determined” pending the issuer’s decision after SEBI’s observations have been incorporated. The DRHP is a public document; SEBI posts it on its primary issues portal on the date of filing, allowing any member of the public, media organisation, analyst, or prospective investor to read and comment on it during the thirty-day observation window.

Role of the DRHP in the IPO timeline

The DRHP initiates the formal regulatory phase of an IPO preparation. The typical timeline from first filing to listing runs as follows:

Total elapsed time from DRHP filing to listing is typically five to eight months for a mainboard issue on the standard track. The SEBI fast-track issue route, available to already-listed issuers with specified track records, compresses the SEBI review to fifteen working days.

Contents of the DRHP

The contents of the DRHP are prescribed by Schedule VI of the SEBI (ICDR) Regulations, 2018 . The document must include all material disclosures except the final pricing and subscription details. Principal sections are:

Cover page

Issuer’s name, nature of the issue (fresh issue, offer for sale, or combination), names of the book running lead managers (BRLMs) and their SEBI registration numbers, names of co-managers and legal advisors, the SEBI disclaimer that the DRHP is a preliminary document and not final, and the SEBI registration number of the registrar to the issue (KFin Technologies or Link Intime in most cases).

Risk factors

All material risks to the business and the issue, ordered in the BRLM’s assessment of materiality. This section is the most frequently revised between the DRHP and RHP stages, as SEBI may require additional risk factors, ask for quantification of specific risks, or challenge the ordering of risks.

Objects of the issue

Proposed use of net proceeds (for fresh issue) and identification of selling shareholders (for OFS). The objects section in a DRHP may say “the exact amount for each object will be finalised and disclosed in the RHP” for certain line items, provided the broad categorisation is disclosed.

Company overview, management, and financials

These sections must be fully populated in the DRHP. The financial statements must cover at least three preceding financial years (two for SME IPOs), audited under the applicable standard (Ind AS or Indian GAAP), plus a reviewed stub period if the most recent full-year audit is more than six months old at the time of filing.

Issue structure

Investor categories and the percentage allocation among QIB, NII, and retail, including the anchor investor allocation. The price band and lot size are blank but the draft will typically contain a placeholder sentence: “The price band and lot size will be determined in consultation with the BRLMs and disclosed in the RHP.”

SEBI’s review process

Filing and acknowledgement

On the date of DRHP filing, SEBI issues an acknowledgement letter (not an approval) and posts the document on the primary issues portal at sebi.gov.in. The filing is simultaneously made with the stock exchange(s) on which the issuer intends to list, so that the exchanges can run their own eligibility and disclosure checks in parallel with SEBI’s review.

Public comment window

For thirty days from the filing date, any person may submit written comments to SEBI on the disclosures in the DRHP. SEBI does not routinely publish the comments it receives, but they inform SEBI’s internal review and may prompt additional information requests. In practice, the public comment mechanism is most actively used by investigative journalists, IPO research websites, and occasionally by competitors of the issuer who dispute industry claims made in the commissioned industry report.

SEBI’s observation letter

At the end of the review period (thirty working days for the standard track, fifteen for fast-track), SEBI issues an observation letter addressed to the BRLM. The observation letter contains SEBI’s comments on the DRHP and requests for additional disclosures, clarifications, or modifications to the offer structure. Common observations include:

• Requests for enhanced risk-factor disclosure or reordering of risks.
• Queries about the basis for KPI definitions or industry benchmarks.
• Requests for additional disclosure on related-party transactions.
• Queries on the objects of the issue (particularly on the “general corporate purposes” bucket, which SEBI may ask the issuer to disaggregate or cap).
• Structural observations on the offering itself (for example, a cap on the OFS percentage if SEBI judges that the fresh-issue component is insufficient to justify the offering).

SEBI’s observation letter is frequently, and inaccurately, described as a “SEBI approval” or “SEBI no-objection certificate” in popular media. SEBI consistently clarifies that the letter represents completion of regulatory review, not an endorsement of the company’s business prospects or the accuracy of the information in the DRHP. The SEBI observation letter is valid for one year from the date of issue; the issuer must open the subscription window within one year of receiving the letter or file a fresh DRHP.

SEBI’s power to reject

SEBI retains the authority to reject a DRHP or to require its material revision if it finds that the disclosures are materially deficient or that the offering structure contravenes the ICDR. In practice, outright rejection is rare; most DRHP concerns are resolved through the back-and-forth of observations and revised drafts. However, SEBI has in notable cases required issuers to withdraw DRHPs on grounds of non-disclosure of material litigation, undisclosed related-party transactions, or ineligibility under the ICDR criteria.

DRHP versus RHP: key differences

Key differences between a DRHP and a prospectus (final document)

An investor who encounters the term “prospectus” in the context of an IPO may be confused by the three-document architecture: DRHP, RHP, and Prospectus. The Prospectus (sometimes called the Pricing Supplement or Final Prospectus) is the single-page or few-page document filed with the RoC after book building closes, inserting the final issue price and the final category-wise allocation of shares. It legally supersedes the RHP once filed, but its contents are entirely derived from the RHP: the Prospectus does not contain new substantive disclosure; it merely fills in the fields that the RHP left open. The DRHP is the broadest and most preliminary version; the RHP fills in the price and timing details; the Prospectus finalises the price and allotment structure.

SEBI’s DRHP portal and public transparency

SEBI maintains a public-facing portal at sebi.gov.in/filings/public-issues where all DRHPs, observation letters, and final prospectuses are published as they are filed. This portal has been available since the mid-2000s and constitutes one of the most comprehensive public archives of Indian corporate disclosure. Members of the public, including investigative journalists, academic researchers, and market participants, have used this portal to:

• Identify undisclosed risks in DRHPs by cross-referencing the stated risk factors against public court records, regulatory databases, and corporate filings.
• Track the evolution of an issuer’s disclosures between the DRHP and RHP versions (significant changes between the two versions can indicate that SEBI’s observations prompted substantive new disclosure).
• Research the history of a listed company’s pre-IPO disclosures after the company encounters business difficulties post-listing, to assess whether the risk factors disclosed were adequate.

The thirty-day public comment mechanism associated with the DRHP is the formal channel for such scrutiny to be transmitted to SEBI, but even the informal publication of DRHP analyses on financial websites and social media has influenced SEBI’s attention to specific disclosure issues in several cases.

The DRHP in the context of pre-IPO analyst research

Before the formal book-building roadshow begins, the BRLM’s research analysts typically prepare an IPO research note or DRHP review based on the filed DRHP. This research is circulated to the BRLM’s institutional clients (domestic and foreign QIBs) and forms the first systematic external analysis of the company’s fundamentals. Unlike a post-listing initiating coverage note (which is published in the market), the DRHP research note may be restricted in circulation during the SEBI review window to avoid regulatory complications. SEBI’s guidelines on research analyst conflicts of interest prohibit the BRLM’s research team from publishing promotional material about the issuer during the SEBI review period, but internal circulation to existing institutional clients of factual analysis derived from publicly available information is generally permissible.

For retail investors, the practical implication is that by the time the RHP is filed and the retail subscription window opens, institutional investors have had months to study the DRHP, form views, and in some cases obtain management access. The retail investor’s information disadvantage begins with the DRHP, not with the RHP.

Accessing DRHPs

All DRHPs filed with SEBI are publicly available at the SEBI primary issues portal (sebi.gov.in/filings/public-issues). The exchange websites (nseindia.com and bseindia.com) also maintain DRHP archives. The BRLM is required to post the DRHP on its own designated website. As of 2026, the corpus of DRHPs on the SEBI portal goes back to the early 2000s, making it a valuable research archive for the history of Indian primary markets.

Institutional use of the DRHP

Institutional investors, particularly qualified institutional buyers planning anchor participation or early roadshow engagement, study the DRHP months before the public subscription window. The DRHP gives them the first detailed view of the issuer’s financials, KPIs, risk factors, and pricing rationale. Institutional analysts produce research notes on DRHPs, often called “IPO notes” or “DRHP reviews”, that circulate privately within the institutional community before the RHP is filed. Retail investors do not typically receive these notes, reinforcing the information asymmetry between institutional and retail participants.

References

1. Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, Regulation 25 and Schedule VI.
2. Companies Act, 2013, Section 32, Red Herring Prospectus.
3. SEBI Master Circular on Issue of Capital, 2023.
4. SEBI primary issues portal, sebi.gov.in/filings/public-issues, archive of all filed DRHPs.
5. SEBI, FAQ on Primary Market, Offer Documents, available at sebi.gov.in.

See also

• Red Herring Prospectus , the RHP that the DRHP converts into
• Book building , the process the DRHP initiates
• Book running lead manager , the intermediary who prepares and files the DRHP
• Initial Public Offering , the broader IPO process
• IPO price band , the field left blank in the DRHP
• IPO lot size , the field left blank in the DRHP
• SEBI (ICDR) Regulations, 2018 , the regulatory source
• Qualified institutional buyer , the anchor investor category that studies the DRHP earliest
• Reading an RHP , a reference guide applicable to the DRHP as well