Don't Ignore The Fact That This Insider Just Sold Some Shares In RBL Bank Limited (NSE:RBLBANK)

By
Simply Wall St
Published
February 13, 2021

Anyone interested in RBL Bank Limited (NSE:RBLBANK) should probably be aware that a company insider, Brijesh Mehra, recently divested ₹9.7m worth of shares in the company, at an average price of ₹242 each. The eyebrow raising move amounted to a reduction of 34% in their holding.

Check out our latest analysis for RBL Bank

The Last 12 Months Of Insider Transactions At RBL Bank

Over the last year, we can see that the biggest insider sale was by the MD, CEO & Director, Vishwavir Ahuja, for ₹276m worth of shares, at about ₹211 per share. That means that an insider was selling shares at slightly below the current price (₹241). 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. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. We note that the biggest single sale was only 15% of Vishwavir Ahuja's holding.

Over the last year, we can see that insiders have bought 61.96k shares worth ₹9.4m. On the other hand they divested 4.14m shares, for ₹810m. Over the last year we saw more insider selling of RBL Bank shares, than buying. The average sell price was around ₹196. It's not particularly great to see insiders were selling shares at below recent prices. Since insiders sell for many reasons, we wouldn't put too much weight on it. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

NSEI:RBLBANK Insider Trading Volume February 14th 2021

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

Does RBL Bank Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 3.9% of RBL Bank shares, worth about ₹5.6b. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The RBL Bank Insider Transactions Indicate?

Insiders sold RBL Bank shares recently, but they didn't buy any. Zooming out, the longer term picture doesn't give us much comfort. It is good to see high insider ownership, but the insider selling leaves us cautious. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing RBL Bank. At Simply Wall St, we found 3 warning signs for RBL Bank that deserve your attention before buying any shares.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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, but not derivative transactions.

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This article by Simply Wall St is general in nature. 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.
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