The three documents
A DRHP, a red herring prospectus and a prospectus are the same disclosure at three stages. Knowing which one you are holding tells you what is missing from it — and the draft is the one that is open to your comments.
Chapter 2 · Beginner
Three hundred pages arrive and everyone has an opinion. Before reading any of it, establish which of the three documents you are holding, because each is missing something different on purpose.
The draft: DRHP
The draft red herring prospectus is filed with SEBI before anything is final. SEBI's description of it, read on 30 September 2026, contains the sentence most investors have never noticed:
Draft offer document is made available in public domain including websites of SEBI, concerned stock exchanges, or concerned Merchant Banker and Issuer Company for enabling public to give comments, if any, on the draft offer document within specified period of time.
The draft is published so that the public can comment on it. Anyone can read it and write to SEBI or the lead manager if something in it is wrong or missing. Almost nobody does.
It is also available weeks or months before the issue opens, which makes it the only version you can read without a deadline. If you intend to apply for an IPO, the DRHP is where the reading should happen — not during the few days the issue is open.
The offer: red herring prospectus
The red herring prospectus is the document used for a book-built public issue. SEBI:
It contains all the relevant details except that of price or number of shares being offered.
Those two absences are the definition of book building. The price does not exist yet because it is about to be discovered from the bids, which chapter 7 is about. The RHP does carry the price band, and everything else — the business, the financials, the risks, the objects, the litigation, the shareholding.
The RHP is filed with the Registrar of Companies before the issue opens. It is the document you are actually deciding on.
The final: prospectus
The prospectus has everything, price included. The timing is the part worth noticing:
This document is registered with RoC before the issue opens in case of a fixed price issue and after the closure of the issue in case of a book built issue.
In a book-built IPO the complete document, with the final price and issue size, is registered after the issue has closed. By the time the full picture exists on paper, the bidding is over and your money is either allotted or unblocked.
That is not a flaw — the price cannot be known before the book is built — but it settles what "read the prospectus before applying" can mean in practice. What you can read before applying is the RHP, and before that, the draft.
Why the name
The "red herring" is the warning printed on the cover in red: that the document is not final, that no shares can be sold on the basis of it alone, and that the price is yet to be determined. It is a disclaimer, not a description of the contents.
Which pages actually matter
The document is long because it is comprehensive, not because it is all equally useful. The sections this subject sends you to, in reading order:
| Section | What it answers | Chapter |
|---|---|---|
| Cover page | Fresh issue or offer for sale | 1 |
| Objects of the offer | What the money is for | 5 |
| Risk factors | What the company itself admits can go wrong | 8 |
| Restated financials | What the business earns, over three years | 8 |
| Basis for the issue price | How the price was justified, and against whom | 9 |
| Capital structure | Who owns it now, and what they paid | 10 |
| Litigation | What is outstanding against it | 8 |
Seven sections. That is a long evening, not three hundred pages.
The point
The DRHP is the draft, published for public comment and available long before the issue. The RHP has everything except the price and the number of shares. The prospectus has both and, in a book-built issue, is registered after the issue closes.
Check yourself
4 questions. Every answer is explained afterwards, including the ones you get right — guessing correctly is not the same as knowing. Score 70% or more and the chapter is marked done.
Question 1 of 4
0 of 4 answered. You can submit with questions unanswered — they simply score zero.
Now do it with your own numbers
Open any DRHP on SEBI's website and find the section listing the objects of the issue. Then find the same section in the company's red herring prospectus. Note anything that changed between the two.
Amounts and objects do get revised between the draft and the RHP, usually after SEBI's observations. That difference is a free lesson nobody reads.