DRHP LensOffer documents use a vocabulary of their own. This glossary explains each term in one or two sentences and links to the longer guide where there is one.
Terms A to Z
- DRHP
- Draft Red Herring Prospectus. The first offer document filed with SEBI and the exchanges, without final price or issue size. Read more
- RHP
- Red Herring Prospectus. The updated document filed with the Registrar of Companies before the issue opens, with the price band added. Read more
- Prospectus
- The final offer document filed after the issue closes, with the final price and number of shares.
- Price band
- The range within which investors bid. The upper end is the “cap”; the lower end is the “floor”.
- Cut-off price
- An option for retail and employee bidders to bid at whatever final price is discovered within the band.
- Lot size
- The minimum number of shares, and multiples of it, in which you can bid.
- Fresh issue
- New shares issued by the company. The money goes to the company. Read more
- Offer for sale (OFS)
- Existing shareholders selling their shares in the IPO. The money goes to them, not the company. Read more
- Objects of the offer
- The section explaining how the company will use the fresh issue proceeds.
- General corporate purposes (GCP)
- The part of the proceeds without a specific stated use. SEBI caps it as a percentage of the issue.
- Basis for offer price
- The section justifying the price: EPS, P/E, return on net worth, NAV and peer comparison. Read more
- WACA
- Weighted average cost of acquisition. The average price at which promoters and shareholders acquired shares, disclosed to compare with the IPO price.
- KPIs
- Key performance indicators the company discloses, which must be certified and compared with peers.
- Promoter
- The person or entity in control of the company, named as such in the offer document.
- Promoter contribution
- The minimum stake promoters must hold after the IPO, locked in for a set period.
- Pledge
- Shares given as security for a loan. A pledge on promoter shares can lead to forced selling. Read more
- Lock-in
- A period during which certain shareholders cannot sell their shares.
- Anchor investor
- A QIB that commits a day before the issue opens. Half its shares are locked in for 30 days, half for 90 days. Read more
- QIB
- Qualified institutional buyer: mutual funds, insurers, banks, FPIs and similar institutions. Read more
- NII / HNI
- Non-institutional investor: individuals and entities applying for more than ₹2 lakh. Split into small NII and big NII. Read more
- Retail individual investor (RII)
- An individual bidding for up to ₹2 lakh in the issue.
- ASBA
- Application Supported by Blocked Amount. Your money stays in your account, blocked, until allotment.
- UPI mandate
- The request to block funds through UPI that you must approve before the issue’s cut-off time.
- Book running lead manager (BRLM)
- The merchant banker that manages the issue and is responsible for the offer document.
- Registrar to the issue
- The agency that processes applications and finalises allotment, such as KFin Technologies, MUFG Intime India or Bigshare. Read more
- Basis of allotment
- The method, approved by the exchange, by which shares are allotted in each category. Read more
- T+3
- SEBI’s timeline under which shares list three working days after the issue closes. Read more
- GMP
- Grey market premium. An unofficial, unregulated quote of the expected listing premium. Read more
- Kostak
- A fixed price paid in the grey market for an IPO application, regardless of allotment. Read more
- Subscription
- How many times the shares on offer in each category were bid for. Read more
- Green shoe option
- An over-allotment option that lets the stabilising agent support the price after listing.
- Restated financials
- Historical financial statements restated under SEBI rules so that the years are comparable.
- Contingent liabilities
- Possible obligations, such as tax demands or guarantees, that are not yet recorded as liabilities. Read more
- Dealings with promoters, directors and their entities, which must be disclosed. Read more
- Emphasis of matter
- A paragraph in which the auditor draws attention to an important issue without qualifying the opinion.
- SME platform
- The NSE Emerge and BSE SME platforms for smaller companies, with separate rules. Read more
- Monitoring agency
- A credit rating agency appointed to report on how the IPO proceeds are actually used.
- NCD
- Non-convertible debenture. A debt security that pays interest and is not converted into shares. Read more
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Analyse a documentFrequently asked questions
What is the difference between DRHP and RHP?
The DRHP is the draft filed with SEBI for review and has no price. The RHP is filed later with the Registrar of Companies and includes the price band.
What does OFS mean in an IPO?
OFS means offer for sale: existing shareholders selling shares in the IPO. The money goes to them, not to the company.
What is cut-off price in an IPO?
It is an option for retail bidders to accept whatever final price is set within the price band, so the bid is not rejected if the price is fixed at the top.
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.