Insider Sales At Mahickra Chemicals Landed A Good Price

While Mahickra Chemicals Limited (NSE:MAHICKRA) shareholders have had a good week with the stock up 11%, they shouldn't let their guards down. In spite of the relatively cheap prices, insiders made the decision to sell ₹26m worth of stock in the last 12 months. This could be a warning indicator of vulnerabilities in the future.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

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Mahickra Chemicals Insider Transactions Over The Last Year

The Whole-Time Director, Ashish Kumar Gandhi, made the biggest insider sale in the last 12 months. That single transaction was for ₹8.2m worth of shares at a price of ₹100 each. So it's clear an insider wanted to take some cash off the table, even below the current price of ₹162. 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 4.6% of Ashish Kumar Gandhi's holding. Ashish Kumar Gandhi was the only individual insider to sell shares in the last twelve months.

Ashish Kumar Gandhi ditched 263.25k shares over the year. The average price per share was ₹99.43. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

Check out our latest analysis for Mahickra Chemicals

I will like Mahickra Chemicals 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 Mahickra Chemicals

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Mahickra Chemicals insiders own 48% of the company, currently worth about ₹627m based on the recent share price. 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 Do The Mahickra Chemicals Insider Transactions Indicate?

The fact that there have been no Mahickra Chemicals insider transactions recently certainly doesn't bother us. While we feel good about high insider ownership of Mahickra Chemicals, we can't say the same about the selling of shares. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. To help with this, we've discovered 3 warning signs (2 are potentially serious!) that you ought to be aware of before buying any shares in Mahickra Chemicals.

But note: Mahickra Chemicals 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.