Stock Analysis

Trade Alert: Madhusudan Jhunjhunwala At Sarla Performance Fibers Limited (NSE:SARLAPOLY), Has Just Spent ₹1.7m Buying A Small Number of Shares

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Even if it's not a huge purchase, we think it was good to see that Madhusudan Jhunjhunwala, a Sarla Performance Fibers Limited (NSE:SARLAPOLY) insider, recently shelled out ₹1.7m to buy stock, at ₹35.85 per share. Nevertheless, it only increased their shareholding by a minuscule percentage, and it wasn't a massive purchase by absolute value, either.

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The Last 12 Months Of Insider Transactions At Sarla Performance Fibers

In fact, the recent purchase by insider Madhusudan Jhunjhunwala was not their only acquisition of Sarla Performance Fibers shares this year. Earlier in the year, they paid ₹45.07 per share in a ₹3.5m purchase. That means that even when the share price was higher than ₹35.75 (the recent price), an insider wanted to purchase shares. It's very possible they regret the purchase, but it's more likely they are bullish about the company. To us, it's very important to consider the price insiders pay for shares. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. Madhusudan Jhunjhunwala was the only individual insider to buy shares in the last twelve months.

Madhusudan Jhunjhunwala bought a total of 132.77k shares over the year at an average price of ₹41.36. 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!

NSEI:SARLAPOLY Insider Trading Volume March 19th 2023

Sarla Performance Fibers is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Does Sarla Performance Fibers Boast High 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. We usually like to see fairly high levels of insider ownership. Our data indicates that Sarla Performance Fibers insiders own about ₹323m worth of shares (which is 11% of the company). But they may have an indirect interest through a corporate structure that we haven't picked up on. We do generally prefer see higher levels of insider ownership.

So What Do The Sarla Performance Fibers Insider Transactions Indicate?

It is good to see the recent insider purchase. And the longer term insider transactions also give us confidence. When combined with notable insider ownership, these factors suggest Sarla Performance Fibers insiders are well aligned, and quite possibly think the share price is too low. Nice! While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Every company has risks, and we've spotted 3 warning signs for Sarla Performance Fibers you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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, but not derivative transactions.

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