Despite Hitting ₹108, Rajoo Engineers Insiders Still Sold Too Soon

Rajoo Engineers Limited's (NSE:RAJOOENG) stock price has dropped 10% in the previous week, but insiders who sold ₹14m in stock over the past year have had less luck. Insiders would probably have been better off holding on to their shares given that the average selling price of ₹133 is still lower than the current share price.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

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The Last 12 Months Of Insider Transactions At Rajoo Engineers

The insider, Devyani Doshi, made the biggest insider sale in the last 12 months. That single transaction was for ₹8.0m worth of shares at a price of ₹130 each. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The good news is that this large sale was at well above current price of ₹108. So it may not tell us anything about how insiders feel about the current share price.

All up, insiders sold more shares in Rajoo Engineers than they bought, over the last year. 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!

View our latest analysis for Rajoo Engineers

I will like Rajoo Engineers better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Rajoo Engineers Insiders Are Selling The Stock

We've seen more insider selling than insider buying at Rajoo Engineers recently. We note insiders cashed in ₹13m worth of shares. Meanwhile insider Jayantilal Zalavadia bought ₹468k worth. Generally this level of net selling might be considered a bit bearish.

Insider Ownership

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Rajoo Engineers insiders own about ₹12b worth of shares (which is 69% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Does This Data Suggest About Rajoo Engineers Insiders?

Unfortunately, there has been more insider selling of Rajoo Engineers stock, than buying, in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. On the plus side, Rajoo Engineers makes money, and is growing profits. It is good to see high insider ownership, but the insider selling leaves us cautious. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Our analysis shows 2 warning signs for Rajoo Engineers (1 is concerning!) and we strongly recommend you look at them before investing.

Of course Rajoo Engineers may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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.