Quick Take
- A DRHP is the key document every company files with SEBI before going public in India.
- It discloses three years of financials, all material risk factors, and the planned use of IPO proceeds.
- After SEBI issues its observations within 30 days, the company has 12 months to launch its IPO.
What Is a DRHP? A DRHP, or Draft Red Herring Prospectus, is the mandatory document every Indian company must submit to SEBI before launching an IPO (Initial Public Offering, when a private company first sells shares to the public for the first time).
Think of the DRHP as a company’s public financial confession. It tells potential investors exactly how the business earns money, reveals three years of audited accounts, lists every material risk the company faces, and explains how IPO funds will be spent. SEBI (Securities and Exchange Board of India, India’s statutory capital markets regulator) reviews every detail before clearing any public listing.
html
StartupFeed Insight
Understanding what is a DRHP in practice starts with this: it is the most candid document a startup ever produces, making it the best research tool available to anyone tracking Indian startups. Founders spend years crafting a controlled growth narrative for investor decks. The DRHP forces them to disclose every pending lawsuit, every related-party transaction, every loss year, and every regulatory approval still pending. Analysts and retail investors should bookmark sebi.gov.in, since every new DRHP goes public within one working day of filing. Expect 15 or more Indian startup DRHPs to be filed with SEBI in FY27, as the IPO pipeline built since 2023 finally converts to listings, StartupFeed Desk.
What Is a DRHP and Why Does Every Startup Need One?
India’s IPO rules say every company wanting to list on BSE (Bombay Stock Exchange) or NSE (National Stock Exchange) must file a DRHP before it can open an IPO subscription. This requirement comes from SEBI’s ICDR (Issue of Capital and Disclosure Requirements) Regulations, 2018, which set the exact standards for every public offering in India.
The DRHP is India’s equivalent of the S-1 filing that companies in the United States submit to the SEC (Securities and Exchange Commission, the US capital markets regulator). The principle is identical: full public disclosure before taking money from ordinary investors.
Companies cannot file the DRHP on their own. They must hire a SEBI-registered merchant banker, also called a BRLM (Book Running Lead Manager, the investment bank that manages the entire IPO process from paperwork to listing day). The BRLM prepares the document, submits it to SEBI, and handles all communication with the regulator.
Once submitted, SEBI publishes the DRHP on sebi.gov.in within one working day. Anyone in the world can read it for free.
The name carries meaning. It is “Draft” because the final offer price is not yet fixed. It is called “Red Herring” because the original prospectus cover page carried a red-printed notice warning readers that the document was incomplete. It is a “Prospectus” because it is a formal legal offer document governed by the Companies Act, 2013.
Here are the six main sections inside every DRHP and what each reveals:
| Section | What It Contains | Why It Matters |
|---|---|---|
| Business Overview | Business model, products or services, revenue streams, geographic reach | Tells investors what the company does and how it earns money |
| Financial Statements | Three years of audited profit and loss, balance sheet, and cash flow statements | The main basis for IPO valuation; shows the profitability or loss trend |
| Risk Factors | All material risks the company is legally required to acknowledge | The most candid section; includes regulatory exposure, competition threats, and losses |
| Use of Proceeds | A detailed breakdown of how each rupee raised from the IPO will be spent | Shows whether the company is raising to grow or to let early investors exit |
| Promoter Information | Founder and promoter identity, shareholding percentages, prior business history | Flags founder concentration risk and any prior regulatory or legal issues |
| Legal and Regulatory | All pending lawsuits, show-cause notices, and approvals still required | Uncovers hidden liabilities that companies never mention in press releases |
The risk factors section is, in practice, the single most honest part of any DRHP. Companies are legally required to include risks they would rather not disclose. That is exactly why analysts read it first.
About SEBI
SEBI is India’s statutory capital markets regulator, founded in 1988 and given full statutory powers by Parliament in 1992. It is based in Mumbai. Under its ICDR Regulations, 2018, SEBI sets the mandatory standards for every public offering document in India. All DRHP filings are publicly accessible on sebi.gov.in, and SEBI must issue its observations on any complete filing within 30 days of receipt.
How Does SEBI Review a DRHP, and How Long Does It Take?
SEBI does not approve or reject a DRHP with a simple yes or no. It issues “observations,” which serve as a clearance to proceed, sometimes with conditions or requests for additional disclosure attached.
Under the ICDR Regulations, SEBI must issue observations within 30 days of receiving a complete filing. Once those observations are issued, the company has a 12-month window to open its IPO to investors. If it does not launch within those 12 months, it must refile the DRHP and restart the 30-day clock.
SEBI commonly asks companies to expand their risk factors section, clarify how funds moved between group companies, or provide updated financials if the DRHP is more than six months old. These requests can add several weeks to preparation time.
There is also a newer option SEBI introduced in 2022: the confidential pre-filing route. This lets a company submit the DRHP to SEBI privately, receive initial feedback, make revisions, and only then release the document to the public. PhysicsWallah used this route in 2024 before its public DRHP filing.
What Is a DRHP vs. an RHP vs. a Final Prospectus?
The DRHP is the first of three key documents in the IPO journey. Each version is more complete than the one before it.
| Document | When Issued | What Is Added |
|---|---|---|
| DRHP (Draft Red Herring Prospectus) | Before SEBI review | No price band yet; financials may be 6 to 12 months old |
| RHP (Red Herring Prospectus) | After SEBI observations, before IPO opens | Price band added; updated financials included |
| Final Prospectus | After IPO closes | Allotment details and confirmed final offer price |
Once SEBI issues observations and the company decides to proceed, the BRLM adds the price band to create the RHP (Red Herring Prospectus). This is the document investors read during the subscription window. After the IPO closes and shares are allotted, the company files the Final Prospectus with the RoC (Registrar of Companies, the government office where all company filings are registered).
Notable recent Indian startup DRHPs include Swiggy‘s October 2024 filing, which led to a Rs 11,327 Cr IPO in November 2024, and Ola Electric’s 2024 filing, which raised Rs 6,145 Cr from public investors. Ather Energy filed its DRHP in early 2025. Meesho and Zepto are among the names widely expected to file in 2025 to 2026.
What’s Next
India’s startup IPO pipeline is active. Multiple companies, including names in fintech, quick commerce, and edtech, are preparing or expected to file DRHPs through 2025 and 2026. The best way to track them is to check sebi.gov.in directly: every new DRHP appears publicly within one working day of submission, before any media coverage begins. Is there a specific startup IPO you are watching for this year?
Frequently Asked Questions
What Is a DRHP and what does it stand for?
A DRHP stands for Draft Red Herring Prospectus. It is the mandatory document every Indian company must file with SEBI before it can launch an IPO. It contains three years of audited financials, a full list of business risks, promoter details, and the company’s plan for spending the money it raises from public investors.
How long does SEBI take to review a DRHP?
SEBI must issue its observations on a DRHP within 30 days of receiving a complete filing. Once observations are issued, the company has a 12-month window to open its IPO. If it does not launch within those 12 months, it must refile the DRHP and restart the review process.
Can anyone read a company’s DRHP before its IPO opens?
Yes. Every DRHP filed with SEBI is made publicly available on sebi.gov.in within one working day of submission, free of charge. A typical DRHP runs 300 to 600 pages. Retail investors can use it to study a company’s financials, risk factors, and use of funds before deciding whether to apply for the IPO.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. StartupFeed and its authors are not SEBI-registered investment advisors. The analysis above is based on publicly available information and should not be the sole basis for any investment decision. Please consult a SEBI-registered financial advisor before making investment decisions.
Have a tip? Write to us at editorial@startupfeed.in.
