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

We wouldn't blame Dr. Lal PathLabs Limited (NSE:LALPATHLAB) shareholders if they were a little worried about the fact that Om Manchanda, the MD & Director recently netted about ₹79m selling shares at an average price of ₹3,140. However, that sale only accounted for 2.9% of their holding, so arguably it doesn't say much about their conviction.

See our latest analysis for Dr. Lal PathLabs

Dr. Lal PathLabs Insider Transactions Over The Last Year

The Executive Chairman, Arvind Lal, made the biggest insider sale in the last 12 months. That single transaction was for ₹681m worth of shares at a price of ₹3,406 each. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is ₹3,039. So it may not shed much light on insider confidence at current levels.

In total, Dr. Lal PathLabs insiders sold more than they bought over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

I will like Dr. Lal PathLabs 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.

Insider Ownership Of Dr. Lal PathLabs

For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It's great to see that Dr. Lal PathLabs insiders own 55% of the company, worth about ₹140b. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Does This Data Suggest About Dr. Lal PathLabs Insiders?

Insiders sold Dr. Lal PathLabs shares recently, but they didn't buy any. And our longer term analysis of insider transactions didn't bring confidence, either. On the plus side, Dr. Lal PathLabs makes money, and is growing profits. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. 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.

Of course Dr. Lal PathLabs 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.