Red Herring Prospectus
The offer document filed before an IPO containing all details except the final issue price and size.
How it is identified
Test: the document is filed with the registrar and contains complete disclosure other than the final price and number of shares
Unit
qualitative
In depth
The RHP is the single most complete document available about a company going public: business description, financials, risk factors, use of proceeds, litigation, related party transactions and the promoters' selling intentions. Its risk factors section is written by lawyers to protect the company and is therefore unusually candid about what can go wrong. The most informative parts for an investor are the fresh issue versus offer for sale split, the use of proceeds, and the price at which existing investors bought in earlier rounds. It runs to hundreds of pages, is free, and is read by a small fraction of applicants.
Worked example
An RHP discloses that pre-IPO investors bought at ₹84 a share eleven months before an issue priced at ₹300. Both numbers are in the same document, and only one appears in the advertising.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Red Herring Prospectus” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.