DRHP LensA main-board DRHP routinely runs past 400 pages. Most of it is legal plumbing. The decision-relevant facts sit in perhaps 40 of those pages, and an experienced reader goes to them in a fixed order. This is that order.
What a DRHP is, in one paragraph
When an Indian company wants to list, it files a Draft Red Herring Prospectus with SEBI under the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICDR). The draft is put out for public comment, SEBI issues its observations, and the company then files a Red Herring Prospectus (RHP) with the Registrar of Companies before the issue opens. The DRHP is your earliest and most complete look at the company, because every later document is built on it. For the difference between the three documents, see DRHP vs RHP vs Prospectus.
The reading order that saves the most time
- Objects of the Offer. Is this a fresh issue that funds the business, or an offer for sale where existing shareholders cash out? Look at the split, the specific uses (capex, debt repayment, working capital) and how much sits in "general corporate purposes". More on this in Offer for sale vs fresh issue.
- Capital Structure. Who owns what before and after, what price recent allotments and transfers happened at, and whether promoter shares are pledged or encumbered. A large gap between recent pre-IPO pricing and the expected IPO price is worth understanding.
- Restated Financial Information, starting with the auditor's report. Read the examination report and any qualifications, emphasis of matter paragraphs or comments in the auditor's report on the underlying audited accounts before you read a single number.
- Management's Discussion and Analysis. This is where revenue mix, margins, working capital and the reasons for movements are explained. Compare the narrative with the numbers.
- Financial Indebtedness. Lenders, sanctioned and outstanding amounts, security, covenants, and any defaults or restructuring.
- Outstanding Litigation and Material Developments. Criminal proceedings, regulatory actions, tax demands and material civil cases against the company, its promoters, directors and group companies, with amounts.
- Our Promoters and Promoter Group, Group Companies, Related Party Transactions. Look for related-party revenue or purchases that are large relative to the business, and promoter entities in similar lines of business.
- Our Business and Industry Overview. Customer and supplier concentration, capacity utilisation, order book, and whether the industry report was commissioned by the company (it usually is).
- Risk Factors. Read it last. By now you will recognise which risks are specific and material and which are standard wording.
Five numbers to write down as you go
- Fresh issue versus offer for sale, in rupees and as a share of the total issue.
- Promoter holding before and after the issue, and the percentage of it that is pledged.
- Revenue from the top one and top ten customers.
- Total borrowings and the portion being repaid from issue proceeds.
- The aggregate amount involved in outstanding litigation and tax demands.
These five figures tell you most of what you need to decide whether the issue deserves a deeper read.
Common mistakes
- Reading the summary only. The Offer Document Summary is accurate but compressed; qualifications and litigation detail are elsewhere.
- Ignoring the auditor's language. An emphasis of matter on going concern or a qualification on inventory is not a footnote.
- Treating the industry report as independent research. Check who commissioned and paid for it; the DRHP will say.
- Missing the "Material Developments" update. Events after the last balance sheet date are disclosed separately; read them.
Doing this faster
The method above takes a careful reader four to eight hours on a full DRHP. DRHP Lens maps these sections automatically, runs a red-flag scan in your browser and cites every finding to a page, so you can check it against the document yourself. Use our DRHP red flags checklist alongside it.
Run the red-flag scan
Upload a DRHP, RHP, NCD prospectus, AIF PPM or annual report. The scan runs in your browser, nothing is uploaded, and every finding is cited to a page.
Analyse a documentFrequently asked questions
What is a DRHP?
A Draft Red Herring Prospectus is the first offer document a company files with SEBI (and the stock exchanges) when it plans an IPO. It describes the business, financials, promoters, risks, litigation and the objects of the issue, but leaves out the final price and issue size.
Where can I download a DRHP?
DRHPs are published on the SEBI website under Filings, on the websites of the stock exchanges, and on the websites of the book-running lead managers named in the document.
Which section of a DRHP should I read first?
Start with the Objects of the Offer and the Capital Structure to see where the money goes and who is selling, then read Outstanding Litigation, the auditor's remarks in the Restated Financial Information, and Financial Indebtedness. Risk Factors is long and partly boilerplate, so read it last with those facts in mind.
This guide is general education about how Indian offer documents are structured. It is not investment advice or a recommendation to subscribe to any issue. Regulations change; always read the current offer document and the SEBI regulations it refers to, and consult a SEBI-registered investment adviser before you invest.