DRHP stands for Draft Red Herring Prospectus — the draft offer document a company files with SEBI ahead of an IPO, usually several hundred pages and free to download. It carries the objects of the issue, the fresh issue versus offer for sale split, restated financials for the past few years, a mandated risk factors section, and promoter and related-party disclosures. It is a draft because the price band and final issue size are still left blank at that stage.

the part of an ipo in which existing shareholders sell their own shares is called

An offer for sale, usually shortened to OFS. The money from that portion goes to the selling shareholders, so the company itself receives nothing from it — only the fresh issue portion brings new capital into the business. An IPO that is entirely an offer for sale is perfectly legitimate, since early investors are entitled to exit, but the growth-capital description does not apply to it.

difference between fresh issue and offer for sale

A fresh issue creates new shares and the money raised goes into the company, which dilutes existing holders but funds expansion, working capital or debt repayment. An offer for sale is existing shares changing hands, so the proceeds go to the selling shareholders and the company balance sheet is unchanged. Most Indian IPOs are a mix of the two, and the split is stated on the front pages of the offer document.

what does objects of the issue mean in an ipo prospectus

The objects of the issue is the section stating exactly what the company intends to do with the money it raises — capacity expansion, repaying borrowings, working capital, an acquisition, and so on. It is worth reading closely because a large share parked under “general corporate purposes” is not a plan, and because these objects apply only to the fresh issue money, never to the offer for sale portion.

where can I download an ipo drhp for free

From the SEBI website under its public issue filings, from the NSE and BSE websites, and from the lead managers named on the cover of the document. All three are free, and the later Red Herring Prospectus carrying the price band is published the same way. Most IPO news pages also link the PDF directly.

Reading an IPO offer document · Market Vidyalaya

Every IPO comes with a DRHP — a draft offer document running to hundreds of pages, filed with SEBI and free to download. Almost nobody reads it, and it contains, by law, a section listing everything that could go wrong.

Think of it like this

Ghar ke kaagaz padhe bina

Nobody buys a flat without reading the sale deed — who owns it, what is mortgaged, what the disputes are. The broker's brochure is not the document you rely on.

In the market

The DRHP is the sale deed. The IPO advertisement and the grey-market chatter are the brochure, and the difference between them is usually where the decision is.

The five sections that matter

In this order, and you can stop early

1
1. Objects of the issue
Where the money goes. Expansion and debt repayment are real uses. "General corporate purposes" for a large share of the proceeds is not a plan.
2
2. Fresh issue versus offer for sale
A fresh issue puts money into the company. An offer for sale puts it into the pockets of existing holders — the company receives nothing at all.
3
3. Risk factors
Legally mandated, written by the company's own lawyers, and the most candid part of the document. Read all of them, however boilerplate they look.
4
4. Financial statements and restatements
Three to five years, restated. Look at whether margins spiked in the year immediately before the IPO — a very common pattern.
5
5. Related party transactions and promoter background
Litigation against promoters, regulatory actions, and transactions with entities they control.

The pattern to look for in the financials

Worked example

The pre-IPO margin spike

Restated financials from a DRHP

FY-4OrdinaryMargin 8%

FY-3OrdinaryMargin 9%

FY-2ImprovingMargin 11%

FY-1 (the IPO year)A sudden doublingMargin 19%

What to askCost deferral, a one-off order, or a genuine improvementWhat changed, and does it persist?

What usually happensAnd the valuation was set on the peak yearMargins normalise post-listing

The pricing of an IPO is usually anchored to the most recent year. If that year is anomalously good, you are paying a multiple on earnings that were never the run rate — and the DRHP gives you five years of history to notice.

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Even a good IPO is a lottery on allotment. The reading above tells you whether you want it; this shows what you are likely to actually get.

Check yourself

An IPO consists entirely of an offer for sale. What does this mean?

Simple bhasha mein

Ghar ke kaagaz bina padhe kaun khareedta hai

Flat lete waqt sale deed padhte ho — kiska naam hai, kya girvi hai, koi case hai kya. Broker ka brochure nahi padhte. IPO mein DRHP wahi sale deed hai, aur usme "risk factors" ka poora chapter kanoonan likha hota hai — jise koi nahi kholta.

What to remember

The DRHP is free, filed with SEBI, and contains a mandated list of everything that could go wrong.
Check the fresh issue versus offer for sale split — OFS means the company gets nothing.
Risk factors read as boilerplate and are frequently specific and serious.
Watch for a margin spike in the year immediately before the IPO.
Grey market premium reflects sentiment, not the business.

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Common questions

Short, direct answers to what people ask about this topic.

drhp meaning in ipo: DRHP stands for Draft Red Herring Prospectus — the draft offer document a company files with SEBI ahead of an IPO, usually several hundred pages and free to download. It carries the objects of the issue, the fresh issue versus offer for sale split, restated financials for the past few years, a mandated risk factors section, and promoter and related-party disclosures. It is a draft because the price band and final issue size are still left blank at that stage.
the part of an ipo in which existing shareholders sell their own shares is called: An offer for sale, usually shortened to OFS. The money from that portion goes to the selling shareholders, so the company itself receives nothing from it — only the fresh issue portion brings new capital into the business. An IPO that is entirely an offer for sale is perfectly legitimate, since early investors are entitled to exit, but the growth-capital description does not apply to it.
difference between fresh issue and offer for sale: A fresh issue creates new shares and the money raised goes into the company, which dilutes existing holders but funds expansion, working capital or debt repayment. An offer for sale is existing shares changing hands, so the proceeds go to the selling shareholders and the company balance sheet is unchanged. Most Indian IPOs are a mix of the two, and the split is stated on the front pages of the offer document.
what does objects of the issue mean in an ipo prospectus: The objects of the issue is the section stating exactly what the company intends to do with the money it raises — capacity expansion, repaying borrowings, working capital, an acquisition, and so on. It is worth reading closely because a large share parked under “general corporate purposes” is not a plan, and because these objects apply only to the fresh issue money, never to the offer for sale portion.
where can I download an ipo drhp for free: From the SEBI website under its public issue filings, from the NSE and BSE websites, and from the lead managers named on the cover of the document. All three are free, and the later Red Herring Prospectus carrying the price band is published the same way. Most IPO news pages also link the PDF directly.