Don't Ignore The Insider Selling In Dodla Dairy

We wouldn't blame Dodla Dairy Limited (NSE:DODLA) shareholders if they were a little worried about the fact that Busireddy Venkat Reddy, the Chief Executive Officer recently netted about ₹76m selling shares at an average price of ₹1,217. However, that sale only accounted for 4.3% of their holding, so arguably it doesn't say much about their conviction.

Check out our latest analysis for Dodla Dairy

Dodla Dairy Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the MD & Executive Director, Dodla Reddy, for ₹264m worth of shares, at about ₹1,000 per share. That means that an insider was selling shares at slightly below the current price (₹1,208). 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. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. We note that the biggest single sale was only 1.8% of Dodla Reddy's holding.

Dodla Dairy insiders didn't buy any shares over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

I will like Dodla Dairy 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.

Does Dodla Dairy 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. A high insider ownership often makes company leadership more mindful of shareholder interests. Dodla Dairy insiders own 28% of the company, currently worth about ₹20b 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.

So What Does This Data Suggest About Dodla Dairy Insiders?

Insiders haven't bought Dodla Dairy stock in the last three months, but there was some selling. Looking to the last twelve months, our data doesn't show any insider buying. But since Dodla Dairy is profitable and growing, we're not too worried by this. 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 Dodla Dairy. You'd be interested to know, that we found 1 warning sign for Dodla Dairy and we suggest you have a look.

But note: Dodla Dairy may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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.