The IPO Process Timeline: From DRHP Filing to Listing Day

The IPO process is the sequence a company follows to offer its shares to the public and list them on a stock exchange. It starts with preparing and filing the Draft Red Herring Prospectus (DRHP) with SEBI, followed by regulatory review, the Red Herring Prospectus (RHP), price-band announcement, investor bidding, allotment, and finally listing on the NSE or BSE. After the issue closes, India's T+3 timeline requires the shares to list within three working days. 

In this blog, we'll explain the IPO process from DRHP filing to listing day, what happens at each stage, how allotment and fund unblocking work, and how the opening share price is determined on listing day.

What is a DRHP, and what does the full form mean?

Every mainboard IPO begins with a document called the DRHP. The full form of DRHP is Draft Red Herring Prospectus, and it is the draft offer document a company files with the market regulator before its IPO opens. It includes almost all the disclosures the final offer will contain, covering the business, its financials, promoter details, risk factors, and how the company plans to use the funds raised. What it leaves out is the final price and, often, the exact issue size.

As the IPO moves forward, this draft evolves into two later documents. The Red Herring Prospectus (RHP) is the near-final version that includes the price band, and the Prospectus is the final version, filed once the final price is set. So when people ask what DRHP is, the short answer is that it is the first, draft stage of the offer document, and the point where the regulatory clock starts.

Stage one: Preparing the offer and filing the DRHP

• Appoint merchant bankers: The company appoints merchant bankers, or book-running lead managers, to manage the IPO process.
• Conduct due diligence: They review the company’s accounts, carry out due diligence, and prepare the offer document.
• Prepare the DRHP: Drafting and due diligence typically take about 50 to 60 days and can extend to two or three months for larger or more complex companies.
• File with SEBI and exchanges: Once ready, the DRHP is submitted to SEBI and the stock exchanges.
• SEBI review: SEBI reviews disclosures and may request clearer risk factor disclosures or additional information. It does not approve or endorse the IPO.
• Receive observations: SEBI then issues an observation letter. The review often takes around four to six weeks, although the rules do not set a fixed deadline.

Stage two: The RHP, price band and anchor investors

After SEBI's observations are addressed, the draft is updated into the Red Herring Prospectus. Unlike the DRHP, the RHP is filed with the Registrar of Companies before the IPO opens and contains the price band and other updated offer details. This is also the document that carries the price band, the range within which you place your bid.

The price band is announced before the IPO opens, within the timelines prescribed under the applicable SEBI regulations. One working day before the opening, large institutional buyers known as anchor investors are allotted their shares. Their participation is often read as an early signal of how much demand the issue is likely to see.

Stage three: The subscription window

Place your bid: Once the IPO opens, you can apply through your bank’s ASBA facility, broker, or a supported UPI app.

Funds stay blocked: The application amount remains blocked in your bank account until allotment is finalised rather than being debited immediately.

Subscription period: SEBI requires a public issue to stay open for at least three working days and no more than ten working days.

Typical duration: Most IPOs remain open for three to five working days, giving investors time to review the issue and submit or modify their bids.

Possible extensions: The window may be extended if the price band is revised or if an event, such as a banking strike, disrupts applications.

Maximum limit: Even with an extension, the subscription period cannot exceed ten working days.

Stage four: Allotment, unblocking and the T+3 timeline

The day the issue closes is called T, and everything after it now follows a tight schedule. In 2023, SEBI cut the maximum listing time from T+6 to T+3 working days, a change that became mandatory for all public issues opening on or after 1 December 2023, as set out in SEBI's listing timeline circular.

Here is how those three days play out. On T+1, the registrar finalises the allotment basis, which determines who receives how many shares. On T+2, the allotment, demat credit and unblocking of funds are completed as per the prescribed timeline. On T+3, the shares are listed and begin trading. So from the moment an IPO closes, you know whether you hold the shares within two working days, and you see them list on the third.

Listing day: How the opening price is set

IPO listing day does not begin with normal trading. Both the NSE and BSE run a special pre-open session for newly listed shares, a short window that uses a call auction to discover the opening price before regular trading starts. The NSE confirms this session applies to mainboard and SME IPOs on their first day of trading.

During this session, buy and sell orders are collected and matched to find the price at which the largest number of shares can change hands. That becomes the opening price for the stock. Once the session ends, the share enters continuous trading, and its price moves with ordinary demand and supply. This is the point where the listing price you have been waiting for is finally set.

Conclusion

The IPO process can look like a black box from the outside, but it is really a sequence of dated, regulated steps. Once you know how the DRHP starts the regulatory clock and how the T+3 rule now delivers your shares and the listing within three working days of the close, tracking an upcoming issue becomes far simpler. 

If you want to take part in the next one, you can open a demat account with SMC and apply directly through the ASBA process.

Investments in securities markets are subject to market risks. Read all the related documents carefully before investing.