Rainbow Children's Medicare Insiders Sold ₹86m Of Shares Suggesting Hesitancy

Many Rainbow Children's Medicare Limited (NSE:RAINBOW) insiders ditched their stock over the past year, which may be of interest to the company's shareholders. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for Rainbow Children's Medicare

Rainbow Children's Medicare Insider Transactions Over The Last Year

The Head of Strategy, Mahesh Madduri, made the biggest insider sale in the last 12 months. That single transaction was for ₹45m worth of shares at a price of ₹928 each. That means that even when the share price was below the current price of ₹1,321, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was 98% of Mahesh Madduri's stake.

Rainbow Children's Medicare insiders didn't buy any shares over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Rainbow Children's Medicare Insiders Are Selling The Stock

The last three months saw significant insider selling at Rainbow Children's Medicare. Specifically, insiders ditched ₹12m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Insider Ownership Of Rainbow Children's Medicare

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It's great to see that Rainbow Children's Medicare insiders own 53% of the company, worth about ₹71b. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

What Might The Insider Transactions At Rainbow Children's Medicare Tell Us?

Insiders haven't bought Rainbow Children's Medicare stock in the last three months, but there was some selling. Looking to the last twelve months, our data doesn't show any insider buying. But since Rainbow Children's Medicare is profitable and growing, we're not too worried by this. It is good to see high insider ownership, but the insider selling leaves us cautious. Of course, the future is what matters most. So if you are interested in Rainbow Children's Medicare, you should check out this free report on analyst forecasts for the company.

But note: Rainbow Children's Medicare may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.