Kotyark Industries Drops To ₹653, Yet Insiders May Have Sold Too Early

Even though Kotyark Industries Limited (NSE:KOTYARK) has fallen by 12% over the past week , insiders who sold ₹9.5m worth of stock over the past year have had less luck. Given that the average selling price of ₹1,013 is still lower than the current share price, insiders would probably have been better off keeping their shares.

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 Kotyark Industries

Kotyark Industries Insider Transactions Over The Last Year

In fact, the recent purchase by Gaurang Shah was the biggest purchase of Kotyark Industries shares made by an insider individual in the last twelve months, according to our records. That means that even when the share price was higher than ₹653 (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. Gaurang Shah was the only individual insider to buy shares in the last twelve months.

Anjali Sangtani sold a total of 9.40k shares over the year at an average price of ₹1,013. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

If you are like me, then you will not want to miss this free list of small cap stocks that are not only being bought by insiders but also have attractive valuations.

Insiders At Kotyark Industries Have Bought Stock Recently

There was some insider buying at Kotyark Industries over the last quarter. In that period Chairman & MD Gaurang Shah spent ₹7.7m on shares. But insider Anjali Sangtani sold ₹5.0m worth. While it's good to see the insider buying, the net amount bought isn't enough for us to gain much confidence from it.

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. We usually like to see fairly high levels of insider ownership. Kotyark Industries insiders own 70% of the company, currently worth about ₹4.7b based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At Kotyark Industries Tell Us?

It is good to see the recent insider purchase. But we can't say the same for the transactions over the last 12 months. Overall, we'd prefer see a more sustained buying from directors, but with a significant insider holding and more recent purchases, Kotyark Industries insiders are reasonably well aligned, and optimistic for the future. While it's good to be aware of 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. For instance, we've identified 5 warning signs for Kotyark Industries (2 make us uncomfortable) you should be aware of.

Of course Kotyark Industries 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.