Despite HBL Power Systems Limited's recent decline, insiders have made a around ₹2.9m profit after buying earlier this year.

By
Simply Wall St
Published
February 23, 2022
NSEI:HBLPOWER
Source: Shutterstock

HBL Power Systems Limited (NSE:HBLPOWER) insiders who acquired shares over the previous 12 months, can probably afford to ignore the recent 11% decline in the stock price. After accounting for the recent loss, the ₹14m worth of shares they purchased is now worth ₹17m, suggesting a good return on their investment.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for HBL Power Systems

HBL Power Systems Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Founder Aluru Prasad bought ₹14m worth of shares at a price of ₹51.00 per share. Even though the purchase was made at a significantly lower price than the recent price (₹61.95), we still think insider buying is a positive. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
NSEI:HBLPOWER Insider Trading Volume February 23rd 2022

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Insider Ownership of HBL Power Systems

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Insiders own 10% of HBL Power Systems shares, worth about ₹1.8b. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The HBL Power Systems Insider Transactions Indicate?

It doesn't really mean much that no insider has traded HBL Power Systems shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. It would be great to see more insider buying, but overall it seems like HBL Power Systems insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for the future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing HBL Power Systems. Case in point: We've spotted 2 warning signs for HBL Power Systems you should be aware of.

But note: HBL Power Systems 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, but not derivative transactions.

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