Don't Ignore The Insider Selling In Dr. Lal PathLabs

We'd be surprised if Dr. Lal PathLabs Limited (NSE:LALPATHLAB) shareholders haven't noticed that the MD & Director, Om Manchanda, recently sold ₹24m worth of stock at ₹2,713 per share. On the bright side, that sale was only 0.9% of their holding, so we doubt it's very meaningful, on its own.

See our latest analysis for Dr. Lal PathLabs

Dr. Lal PathLabs Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the Executive Chairman, Arvind Lal, sold ₹437m worth of shares at a price of ₹2,300 per share. That means that even when the share price was below the current price of ₹2,688, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. 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 0.7% of Arvind Lal's holding.

In the last year Dr. Lal PathLabs insiders didn't buy any company stock. 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 Dr. Lal PathLabs better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Does Dr. Lal PathLabs Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Dr. Lal PathLabs insiders own about ₹126b worth of shares (which is 56% 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 Dr. Lal PathLabs Insider Transactions Indicate?

Insiders sold stock recently, but they haven't been buying. And even if we look at the last year, we didn't see any purchases. But it is good to see that Dr. Lal PathLabs is growing earnings. It is good to see high insider ownership, but the insider selling leaves us cautious. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. At Simply Wall St, we found 2 warning signs for Dr. Lal PathLabs that deserve your attention before buying any shares.

But note: Dr. Lal PathLabs 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.