Insiders At Safari Industries (India) Sold ₹178m In Stock, Alluding To Potential Weakness

Quite a few Safari Industries (India) Limited (NSE:SAFARI) insiders sold their shares over the past year, which may be a cause for concern. When evaluating insider transactions, knowing whether insiders are buying is usually more beneficial than knowing whether they are selling, as the latter can be open to many interpretations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

See our latest analysis for Safari Industries (India)

The Last 12 Months Of Insider Transactions At Safari Industries (India)

Over the last year, we can see that the biggest insider sale was by the Chief Financial Officer, Vineet Poddar, for ₹25m worth of shares, at about ₹2,090 per share. That means that even when the share price was below the current price of ₹2,535, 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. 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. It is worth noting that this sale was only 16% of Vineet Poddar's holding.

Insiders in Safari Industries (India) didn't buy any shares in the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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Safari Industries (India) Insiders Are Selling The Stock

The last three months saw significant insider selling at Safari Industries (India). Specifically, insiders ditched ₹111m worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Safari Industries (India) insiders own about ₹54b worth of shares (which is 43% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The Safari Industries (India) Insider Transactions Indicate?

Insiders haven't bought Safari Industries (India) stock in the last three months, but there was some selling. And even if we look at the last year, we didn't see any purchases. But it is good to see that Safari Industries (India) is growing earnings. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Safari Industries (India). In terms of investment risks, we've identified 2 warning signs with Safari Industries (India) and understanding these should be part of your investment process.

Of course Safari Industries (India) 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.