Selling ₹715m Of Stock Was Lucrative Decision For Gravita India Insiders

While Gravita India Limited (NSE:GRAVITA) shareholders have enjoyed a good week with stock up 13%, they need remain vigilant. In spite of the relatively cheap prices, insiders made the decision to sell ₹715m worth of stock in the last 12 months. This could be a warning indicator of vulnerabilities in the future.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Gravita India

The Last 12 Months Of Insider Transactions At Gravita India

The Founder, Rajat Agrawal, made the biggest insider sale in the last 12 months. That single transaction was for ₹701m worth of shares at a price of ₹934 each. That means that an insider was selling shares at slightly below the current price (₹2,189). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 2.6% of Rajat Agrawal's holding.

Insiders in Gravita India didn't buy any shares in 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!

For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.

Gravita India Insiders Are Selling The Stock

The last quarter saw substantial insider selling of Gravita India shares. In total, insiders dumped ₹5.3m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Does Gravita India Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Gravita India insiders own about ₹99b worth of shares (which is 67% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

What Might The Insider Transactions At Gravita India Tell Us?

Insiders sold stock recently, but they haven't been buying. And there weren't any purchases to give us comfort, over the last year. On the plus side, Gravita India makes money, and is growing profits. It is good to see high insider ownership, but the insider selling leaves us cautious. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Gravita India. While conducting our analysis, we found that Gravita India has 2 warning signs and it would be unwise to ignore them.

But note: Gravita India 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.