RHP, price band and the IPO timeline

The red herring prospectus, or RHP, is the updated version of the DRHP. It is filed with the Registrar of Companies once SEBI has finished its review and the company is ready to launch. It contains everything the final prospectus will, except the final price and the final number of shares sold, because those depend on demand.

The RHP adds three things to the draft: the price band, the issue opening and closing dates, and the lot size. It also refreshes the financial numbers and the list of risks. This is the document that retail investors should read before bidding.

A price band is the range within which investors can bid for the shares, for example ₹100 to ₹105. The lower end is the floor price and the upper end is the cap price. The company and its bankers choose the band based on the business, its growth, how listed peers are valued and the mood of the market.

SEBI rules say the cap price cannot be more than 120% of the floor price, and the band should be wide enough for real price discovery. A bid can be at any price in the band. Most retail investors bid at the cut-off, which means they accept whatever final price is decided, up to the cap.

Indian IPOs mostly use book building. Investors place bids at different prices and quantities, and the exchange collects them in an order book. When bidding closes, the company and bankers look at how many shares were wanted at each price and choose the price at which the whole offer can be sold. This is called the issue price, and it can be anywhere inside the band.

If demand is strong, the price often lands at the cap. If demand is weak, it may fall lower in the band. Everyone who gets shares pays the same issue price, except for any employee or shareholder discount that the RHP states.

As of October 2026, a main board IPO normally follows the schedule below. Days are working days, which exclude weekends and exchange holidays.

• Announcement: the price band is announced, usually a few days before the opening, in newspapers and on the exchanges.
• One working day before opening: anchor investors bid and are allotted shares.
• Issue open: three working days of bidding, from 10 am on day one to 5 pm on day three. Retail bids can be changed or cancelled while the issue is open.
• Basis of allotment: a day or so after closing, the registrar decides who gets how many shares.
• Refunds and credit: blocked money is released for those who got nothing, and shares go to demat accounts.
• Listing: shares start trading on the exchange on the third working day after the issue closes.

The offer is divided into portions. For a company that qualifies on profit, the usual split is up to half for qualified institutional buyers, at least 15% for non-institutional investors and at least 35% for retail investors. For loss-making companies using the other route, at least 75% goes to institutions, and the rest is shared between non-institutional and retail investors. The RHP shows the exact split for each IPO.

Each portion can be oversubscribed by a different amount. You may hear that an IPO was subscribed 50 times overall but only 5 times in the retail portion. That is why the category matters when you read subscription news.

You cannot buy a single share in an IPO. You bid for a lot, which is the smallest bundle, and for multiples of it. The lot size is set so that one lot costs roughly ₹14,000 to ₹15,000 at the upper end of the band. The retail category covers applications up to ₹2 lakh, so the number of lots you can bid for is limited by that figure. A single retail investor can apply only once per PAN in that category.

Bids above ₹2 lakh go into the non-institutional category, where allotment is in proportion to demand rather than a lottery of equal lots.

Look at the price band against the latest earnings or revenue, and compare it with the valuation of listed companies in the same line of work, which the RHP lists as peers. Check how much is a fresh issue and how much is existing holders selling. Look at the objects of the issue and at the lock-in terms. Last, read the section on litigation and the notes on the auditor's report.

After listing, the share price may be far from the issue price. A discount or premium on listing day is about short-term demand and does not reflect what the company is worth for years. This is general information, not investment, legal or tax advice, so check with a qualified professional.