DRHP Preparation Guide for Indian Companies: Process, Contents and SEBI Checklist
By 
Written by the Sapient Services editorial team. Reviewed by Devender Kumar Malhotra, Registered Valuer, Sapient Services Pvt. Ltd., New Delhi. Last updated: October 2026. Regulatory baseline: SEBI ICDR Regulations, 2018, as last amended on 21 March 2026.
A DRHP is easier to review and reconcile when four things are settled before drafting starts: the eligibility route, what the money will be spent on, how the price will be justified, and one reconciled schedule of related party dealings.
This DRHP preparation guide follows that order, then covers the filing process and the 2026 ICDR changes.
Sapient Services Pvt. Ltd. is a valuation and advisory firm in New Delhi that works with issuers across Delhi NCR and India. To discuss your DRHP preparation requirements, speak with the team through our DRHP preparation and filing services page.
Quick answer: A DRHP is the draft offer document an issuer files with SEBI and the stock exchanges through a SEBI-registered lead manager. It stays open for public comment for at least 21 days while SEBI raises queries. After the observation letter, the issuer files the RHP and must open the issue within 12 months (18 on the confidential route).
DRHP Full form and Meaning
DRHP stands for Draft Red Herring Prospectus. It is the draft offer document an issuer prepares for an IPO, and it carries the disclosures investors and regulators need. The final price information is fixed later. For mainboard issues, the lead manager files the draft under the SEBI ICDR framework.
Filing does not commit the company to list. Some issuers let their observation letters lapse when markets turn.
An observation letter is not an approval. It records SEBI’s observations on the draft and the issuer’s responses, and it says nothing about the business, the valuation or the investment merits.
DRHP vs RHP vs Prospectus
- DRHP: filed first with SEBI and the exchanges for review. It carries no final price or price band, though it can state the proposed issue size.
- RHP: filed with the Registrar of Companies before a book-built issue opens. It carries the price band but not the final issue price.
- Prospectus: filed after pricing, with the final issue price and the final offer details.
The later documents inherit the DRHP’s disclosures, so an error left in the draft costs more to fix at the RHP stage. For the wider process, see our guide on what an IPO is and how it works.
Who Prepares a DRHP
The issuer, its management and advisers provide and verify the information. The SEBI-registered lead manager coordinates the process, carries out due diligence, files the document and gives SEBI a due diligence certificate.
- Statutory auditor: restated financials. Legal counsel: litigation, approvals, contracts and corporate history.
- Independent professionals: valuers for valuation inputs (see our business valuation services), and chartered engineers where capex is an object. Support project costs with vendor quotations and, where relevant, an engineer’s certificate.
DRHP Eligibility Requirements
Check eligibility first, because it fixes the filing route.
Regulation 6(1) asks for an average operating profit of at least ₹15 crore over the preceding three years, restated and consolidated, with a profit in each year.
It also asks for net tangible assets of at least ₹3 crore and net worth of at least ₹1 crore in each of the preceding three full years.
Issuers that fall short can use Regulation 6(2), which requires at least 75% of the net offer to go to QIBs. Regulation 8A then caps the offer for sale.
A shareholder above 20% before the IPO, alone or with persons acting in concert, can offer at most 50% of its holding. One below 20% can offer at most 10%.
The limits are measured at the date of the draft, and earlier secondary sales count toward them. Regulation 6(1) issuers are exempt.
DRHP Preparation vs DRHP Filing
Preparation is the issuer’s work before anything reaches SEBI: data collection, due diligence, restated financials, drafting and reconciliation. Filing starts when the lead manager submits the draft.
After that come exchange approval, public comments, SEBI’s queries and an updated document. Plan the two stages separately, because the first is in your control and the second is not.
What a DRHP Contains, Chapter by Chapter
Part A of Schedule VI of the ICDR Regulations prescribes the disclosures. Typical chapters are Risk Factors, Industry Overview, Our Business, Capital Structure, Our Management, Promoters, Approvals, Litigation, Objects of the Offer and Basis for Offer Price.
Risk Factors in a DRHP
Write risks that belong to this issuer, such as customer concentration, pending litigation or dependence on one regulator, and say how large each exposure is.
Objects of the Offer in a DRHP
Each object needs an amount, a cost basis and a timeline. ‘Working capital requirements’ alone cannot be tested; state the incremental working capital, the assumptions and the years it covers. For capex, attach vendor quotations. For debt repayment, name the loans.
General corporate purposes are capped at 25% of the amount being raised by the issuer, measured on the gross proceeds of the fresh issue (Regulation 7(2)), and at 35% together with unidentified acquisitions.
Where the fresh issue exceeds ₹100 crore (offer for sale not counted), a SEBI-registered credit rating agency monitors the use of proceeds and reports quarterly until 100% is used. Since January 2022 the general corporate purposes amount is monitored too.
Basis For Offer Price in a DRHP
Also called the basis for issue price, this chapter justifies the price with EPS, price to earnings against listed peers, return on net worth, net asset value and operating KPIs, shown with their formulas, methods and limits. None of them sets the price on its own.
Disclose the price per share of primary issues and specified secondary transactions in the 18 months before filing where the transaction was 5% or more of fully diluted capital, counting transactions within a rolling 30 days together.
Financial Information and Related Party Transactions
Financial information in the offer document must not be more than six months old when the issue opens. Identify and reconcile related party transactions and make the disclosures the ICDR Regulations, the Companies Act and the accounting standards require, including promoter and director dealings and fund movements between group companies.
Promoters, Litigation and Approvals
Disclose outstanding litigation as Schedule VI requires, applying your board-approved materiality policy, with the exposure where it can be quantified. Include regulatory actions against the issuer, its promoters and directors.
A wilful defaulter or fraudulent borrower declaration goes on the cover page. Review material contracts for clauses an IPO could trigger, such as change of control or lender consent.
Draft Abridged Prospectus
The 2026 amendment made the draft abridged prospectus (Part E of Schedule VI) an offer document, submitted with the draft and published alongside it for public comments. Build it from the same verified data set as the DRHP. Reconcile every figure before filing.
DRHP Filing Process with SEBI, Step by Step
This sequence applies to a mainboard IPO on the standard route.
- Check eligibility and settle the filing route.
- Appoint the lead manager, legal counsel and auditor, and start due diligence.
- Draft each chapter, with supporting records for every statement.
- The lead manager files the draft with SEBI and the exchanges, with the due diligence certificate and the draft abridged prospectus. The exchanges give in-principle approval.
- The draft offer document and abridged prospectus stay on the lead manager’s website for at least 21 days of public comments, and the lead manager reports the comments to SEBI.
- Answer SEBI’s queries. SEBI may issue observations within 30 days from the later of the prescribed dates, including receipt of the draft, satisfactory replies to its clarifications and the exchanges’ in-principle approval. Further query rounds push the date out.
- Receive the observation letter and update the offer document for SEBI’s observations.
- File the RHP with the Registrar of Companies and open the issue within 12 months of the letter (Regulation 44(1)). If the window passes, the observations lapse and you must refile.
Confidential Pre-Filing Route
SEBI introduced this optional route in November 2022 through Chapter IIA of the ICDR Regulations. The issuer pre-files the draft, which stays private during the first review, and announces the pre-filing in newspapers within two working days without issue details.
After SEBI’s observations the issuer files UDRHP-I, public for at least 21 days, then UDRHP-II and the RHP. The letter is valid for 18 months (Regulation 59C), and UDRHP-I is due within 16 months.
The route keeps the draft out of public view during the first review. SEBI still reviews it in full.
SME IPO Draft Offer Document
SME issuers file the draft offer document with the SME exchange platform (BSE SME or NSE Emerge), not with SEBI, and Chapter IX of the ICDR Regulations governs the issue. Do not carry the mainboard figures above across to an SME issue.
These are selected conditions, not an eligibility checklist. The March 2025 amendments tightened several of them:
- EBITDA of at least ₹1 crore in at least two of the preceding three financial years.
- A minimum of 200 allottees.
- Offer for sale limited to 20% of the issue size, and selling shareholders cannot sell more than 50% of their pre-issue holding.
- General corporate purposes capped at the lower of 15% of the amount raised or ₹10 crore.
- Promoter contribution of 20% of post-issue capital, locked in for three years.
Confirm the current post-issue capital limits and the requirements of BSE or NSE before you file. Our page on SME IPO consultants in India covers the full framework.
DRHP Preparation Checklist: Documents and Inputs
The exact set depends on the issuer and its objects. Most issuers need the following.
From the auditor and finance team:
- Audited and restated financial information, not older than six months when the issue opens.
- Price basis workings, with formulas, peer data from the peers’ own filings and the 18-month price history.
- One reconciled schedule of related party transactions and group fund flows.
- Debt documents, with loan repayment details where repayment is an object.
From management and legal:
- Corporate records, the cap table, promoter and director information, material contracts, approvals and group company details.
- Litigation records for pending and threatened matters, with the exposure quantified where possible.
- Amounts, cost basis, timelines and vendor quotations for each object, plus valuation or technical reports where relevant.
- A lock-in plan for shares that cannot be physically locked in, such as pledged shares.
With the lead manager and counsel:
- The filing route, with the offer for sale limits checked if you are on Regulation 6(2).
- A draft abridged prospectus built from the same data as the DRHP.
- A routine to report every transaction in securities by the promoter and promoter group to the exchanges within 24 hours, from filing of the draft until the issue closes (Regulation 54).
How Long DRHP Preparation Takes
No regulation sets a period for preparation, so the time depends on the issuer. The main drivers are restated financials, legal due diligence and litigation, pending restructuring, the evidence behind each object, lead manager review and the number of SEBI query rounds.
The regulatory clocks run separately: 21 days of public comments, 30 days for SEBI’s observations once the trigger dates are met, and 12 months of validity.
Common DRHP Mistakes and Red Flags
- Writing chapters in isolation. The same amounts and shareholding figures recur across Objects, Basis for Offer Price, Capital Structure and the abridged prospectus. Keep one master file and have every chapter quote from it.
- Choosing peers for their multiples. A flattering peer set weakens the price basis. Explain how you chose them and take their data from their own filings.
- Leaving the audit calendar to chance. Figures more than six months old when the issue opens force a rework of every chapter that uses them.
- Marketing language. Adjectives such as “strong” or “fast growing” do not belong in a risk or pricing disclosure. Practitioner guidance such as the Corporate Professionals DRHP Rulebook makes the same point: replace them with metrics.
- Changing the cap table after filing. A pre-IPO placement or promoter transfer needs reporting and can change disclosures, so settle the plan before you file.
Important SEBI ICDR Updates for 2026
Two kinds of change matter for a 2026 filing: permanent amendments and temporary reliefs.
Permanent Change: the March 2026 Amendment
The ICDR (Amendment) Regulations, 2026 came into force on publication in the Gazette in March 2026.
- The draft abridged prospectus became an offer document (Regulation 25) and is published with the draft for 21 days of public comments (Regulation 26).
- Application forms must carry the RHP and the abridged prospectus (Regulation 34(2)).
- Where physical lock-in is not feasible, such as pledged shares, depositories can record the securities as non-transferable on the issuer’s intimation (Regulation 17(2)).
Temporary Reliefs tied to 30 September 2026
- A SEBI circular dated 7 April 2026 (read the circular) extended observation letters expiring between 1 April and 30 September 2026 up to 30 September 2026. The lead manager had to give an undertaking on Schedule XVI compliance.
- A relaxation SEBI communicated to the industry in April 2026 let issues launched on or before 30 September 2026 change the fresh issue size by up to 50% without refiling. It needed SEBI approval, a justification, a public addendum and unchanged objects. Otherwise, a change of more than 20% needs a fresh filing.
As checked on 3 October 2026, the 7 April circular sets 30 September 2026 as the end date of its one-time extension, and we have not found a notification extending either relief. Before relying on any temporary relief, check SEBI’s circulars page and speak to your lead manager.
How Sapient Services Supports DRHP Preparation
Sapient Services Pvt. Ltd. is an IBBI-registered valuation and advisory firm headquartered in Okhla Phase II, New Delhi. We support issuers with valuation, due diligence, technical and documentation inputs during DRHP preparation, alongside the appointed merchant banker and legal advisers.
We have worked with companies such as IKIO Lighting, Greaves Electric Mobility, Proventus Agrocom Limited, MV Electrosystems Limited, Metalman Auto Limited, Viney Corporation Limited and SAEL on DRHP preparation and regulatory documentation. See our clients page.
FAQs
What is the full form of DRHP?
Draft Red Herring Prospectus: the draft offer document an issuer files before an IPO. It carries full disclosures but not the final price information.
What is the difference between a DRHP and an RHP?
The DRHP is filed first for review. The RHP follows SEBI’s observations and carries the price band, but not the final issue price.
Does SEBI approve a DRHP?
No. SEBI issues observations on the draft. The letter is not an approval or endorsement of the company, its securities or the investment.
How long does SEBI take to review a DRHP?
SEBI may issue observations within 30 days from the later of the prescribed dates, including receipt of the draft and satisfactory replies to its clarifications. Further queries lengthen the overall timeline.
What happens after SEBI issues observations?
The issuer updates the offer document, files the RHP with the Registrar of Companies and opens the issue within the validity period of the letter.
How long is a SEBI observation letter valid?
Twelve months on the standard route, within which the issue must open. On the confidential route it is 18 months, with UDRHP-I due within 16.
What documents are required for DRHP preparation?
They depend on the issuer and its objects. Usually they include restated financials, corporate and promoter records, material contracts, litigation records and support for each object; the checklist above groups them.
Is a draft abridged prospectus required with the DRHP?
Yes. Since the March 2026 amendment, the lead manager submits it with the draft offer document and publishes both for public comments.
Can an SME company file a DRHP directly with SEBI?
No. An SME issuer files its draft offer document with the SME exchange platform, BSE SME or NSE Emerge, and Chapter IX of the ICDR Regulations applies.
Where can I read a company’s DRHP?
On the SEBI, NSE and BSE websites and the lead manager’s website. For how investors approach IPOs, see our IPO investment in India page.
What to gather before you talk to an adviser
Four items let an adviser judge your readiness quickly: your filing route under Regulation 6, a cap table with pledged shares marked, the date of your last audited year-end, and a one-page draft of the objects with amounts and timelines.
To talk through your timeline, call +91 9540162888 or email valuation@sapientservices.com.
This article is general information, not legal or investment advice. Rules change often, so confirm current requirements with SEBI’s circulars and your lead manager before acting.
