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To read a Draft Red Herring Prospectus (DRHP), first confirm it is the latest draft, then examine the issuer’s financial statements, borrowings, risk factors and stated use of proceeds. Keep the offer’s fresh issue separate from any offer for sale (OFS): the company receives proceeds from newly issued shares, while an OFS consists of existing shares sold by shareholders. A DRHP is a disclosure document, not an investment recommendation.
What a DRHP tells you—and what it does not
A DRHP is a draft disclosure document for a proposed public issue. It describes the issuer, its financial information, risks and proposed offer terms. Its figures and plans belong to the version you are reading; they can change in a later filing. Historical results describe reported periods, not a forecast of future performance.
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SEBI’s Public Issues filing index distinguishes draft offer documents filed with SEBI from red-herring documents filed with the Registrar of Companies (ROC). Filing status and document date matter: a draft is not necessarily the latest version or the final offer document. For example, the SEBI-hosted SRIT India Limited DRHP dated January 29, 2026 says it will be updated upon filing with the ROC.
How to check a DRHP’s date and status
- Identify the document. Check the cover for the issuer’s name, document date and offer type.
- Check the filing category and status. Use SEBI’s Public Issues index to distinguish a draft filed with SEBI from a red-herring document filed with the ROC.
- Look for a later version. Compare dates and filing status before relying on figures or proposed terms. A number copied from an older draft may no longer match the current offer.
How to assess revenue in a DRHP
Start with the financial statements
Use the audited or restated financial statements included in the filing and compare the periods presented. Separate revenue from operations from other income so that income from the company’s main activities is not confused with other sources.
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Check the quality and concentration of revenue
Read the figures alongside disclosures about customers, products or services, geographies and contracts. If a small number of customers or business lines account for a substantial share of revenue, note that dependence and look for related risks. Compare the financial trend with the company’s business description: consistency can help you understand the issuer’s account of its operations, but it does not establish what will happen next.
Use the issuer’s own disclosures for company-specific figures. The SRIT India Limited DRHP is an example of a filing, not evidence of a universal revenue pattern.
How to read debt and financing risk
A headline borrowing figure alone does not show whether a company can comfortably meet its obligations. Read debt together with interest costs, repayment terms, security and guarantees, and cash generation. Where disclosed, also examine contingent liabilities and any plan to use fresh-issue proceeds to repay or prepay debt.
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- Borrowings: distinguish current from non-current borrowings in the statements.
- Interest burden: note the reported interest expense and compare it with operating performance and cash flows.
- Repayment profile: check when obligations fall due, rather than treating all debt as immediately payable or uniformly long-term.
- Security and guarantees: identify assets pledged and guarantees disclosed in the filing.
- Proposed repayment: compare the amount and timing of planned repayment with the stated fresh proceeds. A proposed repayment is a plan, not proof it has occurred.
Assess these obligations alongside the risk-factor discussion. A planned debt repayment may reduce a stated liability if carried out, but does not by itself establish that the business has low financial risk.
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How to read the risk factors
Read the full risk-factor section, not only a short list or summary. For each material risk, ask how it could affect sales, costs, cash flows, operating permissions or the company’s ability to carry out its stated business plan. Prioritize risks by their potential consequences, and note quantified exposures where the issuer provides them. If a disclosure gives no amount, treat the exposure as unquantified rather than estimating it.
Risk disclosures are issuer-specific, and they may not cover every eventuality. One SEBI-hosted prospectus example cautions that some risks may be unknown and that risks believed to be immaterial could become material. This is a warning in issuer-document language, not a guarantee that every risk has been identified.
Where does IPO money go?
Separate fresh issue from offer for sale
First determine how much of the offer is a fresh issue and how much is an OFS. In a fresh issue, the issuer sells newly issued shares and receives the proceeds. In an OFS, existing shareholders sell their shares; those sale proceeds go to the selling shareholders, not to the issuer as new capital. Check who is selling and how many existing shares are included.
Trace the fresh-issue objects
In the offer document, find the objects of the offer and compare each stated use with its amount, timing and the net proceeds expected to be available. Look for any disclosed funding gap and consider whether the stated allocation is specific enough to understand what the company proposes to do. A draft’s proposed allocation is not proof that the spending has happened.
Do not treat an issuer-specific disclosure as a general rule. For instance, the SRIT India Limited draft includes a 25% cap on gross proceeds for unidentified acquisitions and other strategic initiatives; that figure applies to that issuer’s disclosed offer, not to IPOs generally.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to compare two DRHPs—or two versions of one filing
Use the same comparison points for each document, and verify that the figures refer to the same periods and the same stage of the offer.
| Comparison axis | What to check |
|---|---|
| Revenue | Revenue quality, growth across the periods shown, and concentration by customer, product, geography or contract. |
| Debt | Borrowings, interest burden, repayment profile, security or guarantees, and disclosed cash generation. |
| Risks | How specific the disclosures are, what operating or financial effects they describe, and whether exposures are quantified. |
| Offer mix | Fresh issue versus OFS, including who receives the proceeds. |
| Fresh-issue objects | Clarity of each proposed use, stated allocation and execution timing. |
| Document status | Date, filing category and whether a newer version is available. |
The issuer’s filing is the evidence for issuer-specific figures and plans. These comparison axes help organize what is disclosed; they do not, by themselves, rank IPOs or establish whether an offer is attractive.
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What a DRHP can—and cannot—establish
A DRHP gives readers disclosures to examine, including the issuer’s historical financial information, identified risks and proposed use of fresh proceeds. It does not turn historical performance into a forecast, make proposed allocations completed transactions, or eliminate the need to assess the offer independently.
One SEBI-hosted prospectus states: “Investors are advised to read the risk factors carefully before taking an investment decision in the Offer.” It also says investors must rely on their own examination of the company and offer, including the risks involved. The prospectus language further says that SEBI has not recommended or approved the securities and does not guarantee the document’s accuracy or adequacy. These are disclosures in an issuer prospectus, not an endorsement of an IPO by SEBI.
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