By ipomarket.in Editorial Team · Last reviewed: 2026-08-11
Disclaimer: This article is for informational purposes only and does not constitute investment advice. IPO investments are subject to market risks. Please read the offer document carefully and consult a SEBI-registered investment advisor before investing.
An IPO usually arrives with noise: YouTube thumbnails promising "multibagger listing", WhatsApp groups quoting a grey-market premium, and "insider" tips about a company's market share or growth. Very little of that is verifiable. The good news is that every mainboard IPO comes with a document that is audited, legally required to be internally consistent, and free to read: the Draft Red Herring Prospectus, or DRHP.
This guide explains how to use the DRHP and a handful of official data sources to check whether the hype matches reality. It will not tell you whether to invest. It will show you how to separate a claim you can trust from a claim someone is simply asserting.
Why the DRHP is your equaliser
The DRHP is the first formal IPO document a company files with SEBI and the stock exchanges before launching an offer. Once filed, it is placed in the public domain for a minimum of 21 days for comments.
The reason it matters more than any tip is what SEBI checks. The regulator's review is not about whether the company is a good investment. It is about whether disclosures are complete, consistent with each other, and free of promotional language. A section containing a claim the company cannot independently verify tends to come back with a clarification query. Vague phrases such as "leading manufacturer" or "significant market position" are treated as unverifiable and are grounds for rejection unless backed by a citable source.
SEBI typically issues its observation letter within 30 days of receiving satisfactory responses to its queries. Only after that does the company move towards a Red Herring Prospectus (RHP) with the actual price band. So by the time you read a filed document, it has already survived a sceptical review. If you want the full walkthrough of the document itself, see our explainer on what a DRHP is and how to read it.
The four things SEBI scrutinises
Understanding what the regulator looks at tells you where to focus. Due diligence broadly covers four areas:
- Financial: audited financials and revenue recognition.
- Legal: litigation, regulatory filings and intellectual property ownership.
- Business: operational claims, market-position assertions and growth statements.
- Compliance: promoter shareholding, related-party transactions and any prior regulatory action.
Reviewers specifically check for contradictions between chapters. If the business overview claims strong revenue growth, the risk factors cannot simultaneously describe demand as stable and unremarkable. That built-in consistency requirement is exactly what you can exploit as a reader.
Where to get the real document
Before you cross-check anything, make sure you are reading the genuine filing. All filed DRHPs are publicly available on the SEBI website under the "Public Issues" section, and on the NSE and BSE websites. They are usually also hosted by the lead merchant bankers and the company itself.
A simple rule from investor-protection guidance: if the document is not on SEBI or an exchange site, treat it as fake. No legitimate mainboard IPO circulates only through a Telegram link.
A practical cross-check template
Here is a repeatable way to test hype claims against the filing. Work through each row before you form a view.
1. Growth claims vs the financial statements
When a video says "revenue is growing 40% a year", open the restated financials in the DRHP and check the actual figures across the reported years. Look at whether growth is consistent or driven by a single year, whether it is profitable growth, and whether cash flow from operations supports the story. A rising revenue line with negative operating cash flow is a signal to slow down.
If you are new to reading these statements, our guide on how to analyse IPO financials from the RHP walks through the key line items.
2. The growth narrative vs the risk factors
Read the risk factors chapter in full, not the summary. Because SEBI requires internal consistency, the risks a company is forced to disclose often puncture the marketing narrative: customer concentration, dependence on a single product, regulatory dependencies, or litigation. If the risk factors are vague and generic, that itself is a flag; it may signal thin disclosure rather than a low-risk business.
3. Company and director details vs the MCA portal
Use the Ministry of Corporate Affairs (MCA) portal to confirm the company's CIN, whether it is active, the registered office, directors and registered charges. Cross-check the directors' names against the prospectus and the company website. Mismatches between what a promoter claims publicly and what official records show are worth investigating.
4. Use of proceeds vs earlier promises
Check the "objects of the issue" section. For an offer that is entirely an Offer for Sale (OFS), the company itself receives no fresh capital; existing shareholders are selling. That is a materially different proposition from a fresh issue where money funds expansion or debt reduction. Make sure the pitch you heard matches the actual structure. If the OFS-versus-fresh-issue distinction is unfamiliar, see types of IPOs in India.
5. Price and GMP claims vs official notices
The price band is disclosed in the RHP, not the DRHP. Any specific price or valuation you see before that is an estimate. Grey-market premium figures are unofficial and volatile, and no official source publishes them; treat GMP as sentiment, not data. Verify issue dates, the price band and any notices only on the NSE and BSE sites.
A worked example: the NSE IPO at the DRHP stage
The NSE IPO is a useful illustration of reading a filing rather than the headlines. NSE filed its DRHP on 17 June 2026. Based on the filed document, key confirmed facts include:
- The offer is a 100% Offer for Sale, meaning NSE itself will not receive any of the proceeds.
- The offer covers 14,89,05,525 shares of ₹1 face value.
- The shares are expected to list on BSE, not on NSE's own platform.
- SEBI's no-objection carries a condition that listing be completed before 30 January 2027.
The DRHP also discloses significant contingent liabilities from outstanding litigation, including a compensation claim of ₹857 crore filed by competitor MSEI, currently stayed by the Supreme Court. That is precisely the kind of detail hype coverage tends to skip but the filing is obliged to carry.
What is not yet available: the price band has not been officially announced and will come in the RHP, and there is no meaningful GMP at the DRHP stage. Any valuation figure circulating (reports have mentioned a valuation above ₹5 lakh crore) is an estimate until the RHP fixes a band. You can track the status on our NSE IPO page.
The confidential pre-filing wrinkle
Since November 2022, SEBI has allowed an optional confidential pre-filing route for mainboard IPOs. Here, the company submits its draft to SEBI and the exchanges on a non-public basis first. The version later released for public comments has already been through regulatory scrutiny, so it tends to be more complete from a disclosure standpoint.
The trade-off for retail investors is timing. Early details stay hidden for longer, so you may see marketing before you ever see a document. In that window, the honest position is that specifics are unconfirmed until the public filing appears.
What official checking cannot do
Be realistic about the limits. The DRHP tells you what a company disclosed and confirmed; it does not tell you the future price. There is no official platform that automatically flags contradictions between a DRHP and an RHP, so the consistency checks are still a manual read. And SEBI's observation letters are not published in a consolidated, searchable form, so you cannot easily see what was queried and changed. Cross-checking reduces the risk of being misled by hype. It does not remove market risk.
FAQ
Where can I download the official DRHP for free?
On the SEBI website under the "Public Issues" section, and on the NSE and BSE websites. The lead merchant bankers and the company also usually host it. If a document is only available through a private link and not on these sources, treat it as unverified.
Does the DRHP contain the IPO price band?
No. The DRHP is the draft filing. The price band and final issue dates are disclosed later in the Red Herring Prospectus (RHP). Any specific price quoted before the RHP is an estimate.
How can I tell promotional language from a verifiable claim?
Verifiable claims cite a number, a source, or a period, and are consistent with the financials and risk factors. Promotional phrases such as "leading" or "robust" without any backing are exactly what SEBI treats as unverifiable. Treat unquantified superlatives with caution.
Is grey-market premium a reliable way to judge an IPO?
GMP is unofficial and volatile, and no official source publishes it. It reflects sentiment, not disclosure. For a fuller explanation, read our guide on what IPO GMP is and how it works.
What should I check on the MCA portal?
The company's CIN, whether it is active, the registered office, directors and registered charges. Cross-check the director names against the prospectus and the company website for any mismatch.
Last reviewed: 2026-08-11 by the ipomarket.in Editorial Team.