How not to upset investors after a listing: Samir Arora’s three-point checklist for IPO-linked cos

In an advisory he called a “free corporate advisory” to newly listed companies, prominent market voice Samir Arora outlined a clear three-point guide on how to avoid losing investor confidence post-IPO.The founder and fund manager of Helios Capital took to social media and urged companies to better align earnings returns with their communications strategy.

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

1. Postpone the IPO if first quarter results could disappoint

Arora emphasized that companies should not go public if their immediate financial situation is likely to be disappointing.

He noted that the poor performance in the first quarter after the IPO “really upsets investors,” suggesting it would be better to delay the listing by a few months rather than enter public life with a disappointment. This, he argued, could prevent an immediate erosion of new shareholder confidence.

“Make sure you don’t get poor results in the first quarter after the IPO… It is better to delay the IPO by a few months if the immediate results are below expectations,” Arora said.

2. Don’t create volatility between results and commentary

The market veteran cautioned companies against distinguishing between the timing of earnings announcements and overly bullish commentary. According to him, releasing results one day and providing positive commentary on another creates “unnecessary volatility” in the shares.He emphasized the need for consistency and clarity in messaging, especially when results and tone do not match.

“If you get bad results but end up talking super bullishly on a conference call or vice versa, don’t wait one day between the results and the call,” he warned.

Also read: Beyond Infosys’ record share buyback date: strategy, scenarios and the road ahead for shareholders

3. Align business updates with reality

In his third point, Arora criticized the practice of giving bullish quarterly updates, only to follow them up with disappointing results a few days later. He called on companies to rethink the way they communicate company updates to avoid being perceived as misleading.

“If you’re going to give a bullish quarterly update and then disappoint with the actual results a few days later, you better reconsider how you can give a 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 underlines broader investor sentiment: credibility, consistency and timing are just as important as numbers.

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

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