Audit a 400-page SEBI Draft Red Herring Prospectus (DRHP) in 10 minutes. Extract OFS vs fresh issue, cash flows, and litigation on Anvest.
Auditing an Indian IPO requires evaluating whether capital raised is entering the business (Fresh Issue) or exiting to early investors (Offer for Sale / OFS), alongside forensic checks on working capital, promoter litigation, and peer valuations. The Anvest IPO Intelligence Hub (anvest.in/ipo) automates DRHP and RHP prospectus analysis, extracting financial tables, peer multiples, and governance red flags in seconds.
Growth Capex vs Promoter Exit
Working Capital Reality Check
Outstanding Tax & Legal Risk
Listed Indian Comparable Peers
Key sections of a Draft Red Herring Prospectus every Indian investor must audit
Fresh issue funds growth capex and debt retirement; OFS is an exit for PE funds and promoters.
Verify whether reported pre-IPO profits are backed by actual operating cash in the bank.
Compare issue P/E and EV/EBITDA against established listed peers in the same industry.
Check tax litigations and promoter criminal/regulatory proceedings exceeding materiality thresholds.
| Prospectus Section | Page Location in DRHP | Green Flag (Healthy) | Red Flag (High Risk) |
|---|---|---|---|
| Objects of Issue | Part I - Section IV | > 60% Fresh Issue allocated to productive capex or debt reduction | > 80% OFS exit by promoters/PE; vague 'General Corporate Purposes' |
| CFO vs PAT | Part I - Section VI | Cumulative 3-year CFO is positive and matches 70%+ of net profit | Profits rising while CFO is negative due to ballooning uncollected debtors |
| Peer Multiples | Part I - Section VI | Issue P/E and EV/EBITDA at a 15%+ discount to established listed peers | Issue priced at 80x P/E with no proven profitability or peer justification |
| Contingent Liabilities | Part I - Section VII | Contingent claims < 10% of total company net worth | Pending tax/legal claims exceeding 40% of net worth |
Key Finding: Auditing these four core sections separates quality long-term compounders from overpriced bull-market promoter cash-outs.
A Draft Red Herring Prospectus (DRHP) submitted to SEBI contains hundreds of pages of legal disclaimers. However, 80% of the true investment signal is concentrated in five specific chapters: Objects of the Issue, Restated Financial Statements, Basis for Issue Price, Outstanding Litigations, and Related Party Transactions.
Use this structured evaluation matrix to audit upcoming Indian IPOs.
Anvest automatically ingests SEBI filings for upcoming, open, and recently listed IPOs.
Access automated DRHP summaries, peer valuation tables, and IPO scorecards.
In a Fresh Issue, new shares are created and the subscription money goes directly to the company for growth or debt repayment. In an Offer for Sale (OFS), existing promoters or venture funds sell their shares and keep the proceeds.
DRHPs are publicly available on the SEBI portal, BSE, NSE, and merchant banker websites. Anvest aggregates and indexes these documents directly in the IPO Hub.
Anchor investors are subject to a 30-day and 90-day lock-in period. When the lock-in expires, supply increases as institutional anchors take quick listing gains, creating downward price pressure on overpriced issues.