How to not upset investors after listing: Samir Arora’s 3-point checklist for IPO-bound cos

In an advisory, which he called a ‘free advice to companies’, to newly listed companies, prominent market voice Samir Arora outlined a straightforward 3-point guide on how to avoid losing investor trust post-IPO.

The founder and fund manager of Helios Capital took to social media and urged companies to better align earnings delivery with their communication strategy.

Here’s a look at the three key pointers Arora laid out for companies navigating the volatile period following their market debut:

1. Delay the IPO if Q1 results might disappoint

Arora emphasised that companies should not go public if their immediate financials are likely to underwhelm.

He noted that poor first-quarter performance post-IPO “really upsets investors,” suggesting that it is better to delay the listing by a few months rather than start public life with a disappointment. This, he argued, can avoid an immediate erosion of confidence from new shareholders.

“Make sure you don’t have bad results in the first quarter after IPO... Better to delay IPO by a few months if immediate results will be below expectations,” Arora said.

2. Don’t create volatility between results and commentary

The market veteran cautioned companies against separating the timing of earnings announcements and overly bullish commentary. According to him, disclosing results one day and delivering upbeat commentary on a different day creates “unnecessary volatility” in the stock.

He stressed the need for consistency and clarity in messaging, particularly when results and tone do not match.

“If you are having bad results but you are going to talk super bullish in a conference call or vice versa, don’t keep one day between results and call,” he warned.

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3. Align business updates with reality

In his third point, Arora critiqued the practice of giving bullish quarterly updates, only to follow them with disappointing results days later. He called on companies to rethink how they communicate business updates to avoid being perceived as misleading.

“If you are going to give bullish quarterly business update and then disappoint with actual results a few days later, better rethink how to give business update and not be seen as totally misleading,” he said.

Arora’s comments come at a time when several IPO-bound companies are disappointing investors with their post-listing performance. His advice underscores a broader investor sentiment: credibility, consistency, and timing matter just as much as numbers.

Link: https://x.com/Iamsamirarora/status/1989137655381237783

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)