For Salasar Techno Engineering Insiders, Selling ₹292m Of Shares Was A Smart Move

While Salasar Techno Engineering Limited (NSE:SALASAR) shareholders have enjoyed a good week with stock up 20%, they need remain vigilant. In spite of the relatively cheap prices, insiders made the decision to sell ₹292m worth of stock in the last 12 months. This could be a warning indicator of vulnerabilities in the future.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Salasar Techno Engineering

The Last 12 Months Of Insider Transactions At Salasar Techno Engineering

The Chairman & MD, Alok Kumar, made the biggest insider sale in the last 12 months. That single transaction was for ₹148m worth of shares at a price of ₹19.08 each. So it's clear an insider wanted to take some cash off the table, even below the current price of ₹21.61. 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. We note that the biggest single sale was only 4.9% of Alok Kumar's holding. Alok Kumar was the only individual insider to sell shares in the last twelve months.

Alok Kumar divested 15.10m shares over the last 12 months at an average price of ₹19.35. 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!

I will like Salasar Techno Engineering 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.

Insiders At Salasar Techno Engineering Have Sold Stock Recently

Over the last three months, we've seen significant insider selling at Salasar Techno Engineering. Specifically, Chairman & MD Alok Kumar ditched ₹292m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.

Does Salasar Techno Engineering 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. I reckon it's a good sign if insiders own a significant number of shares in the company. Salasar Techno Engineering insiders own 31% of the company, currently worth about ₹11b based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Does This Data Suggest About Salasar Techno Engineering Insiders?

An insider sold Salasar Techno Engineering shares recently, but they didn't buy any. And there weren't any purchases to give us comfort, over the last year. But since Salasar Techno Engineering 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. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. At Simply Wall St, we found 2 warning signs for Salasar Techno Engineering 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 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.