New Delhi, Aug. 30 -- Initial public offering (IPO) activity in India is gathering pace, with companies raising around Rs.22,400 crore through 26 August. More issues could hit the market before 30 September, when the one-year validity of Sebi approvals for several companies is set to expire.

Since IPO-bound companies do not have a listed-market track record or exchange trading history, investors largely have to depend on information provided before the listing. The red herring prospectus (RHP) is among the most important documents. Examining a few key sections can help investors identify warning signs, assess the company's financial health and decide whether the valuation being demanded is reasonable.

The proportion of IPOs that closed ...