Insiders Relieved After Selling Mahickra Chemicals With 11% Price Dip

Insiders at Mahickra Chemicals Limited (NSE:MAHICKRA) sold ₹12m worth of stock at an average price of ₹99.08 a share over the past year, making the most of their investment. After the stock price dropped 11% last week, the company's market value declined by ₹138m, but insiders were able to mitigate their losses.

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.

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The Last 12 Months Of Insider Transactions At Mahickra Chemicals

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. That means that even when the share price was below the current price of ₹138, an insider wanted to cash in some shares. 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. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 4.6% of Ashish Kumar Gandhi's holding. The only individual insider seller over the last year was Ashish Kumar Gandhi.

Ashish Kumar Gandhi divested 123.00k shares over the last 12 months at an average price of ₹99.08. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

View our latest analysis for Mahickra Chemicals

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Insider Ownership Of Mahickra Chemicals

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. Mahickra Chemicals insiders own about ₹542m worth of shares (which is 49% 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 Mahickra Chemicals Insider Transactions Indicate?

The fact that there have been no Mahickra Chemicals insider transactions recently certainly doesn't bother us. It's heartening that insiders own plenty of stock, but we'd like to see more insider buying, since the last year of Mahickra Chemicals insider transactions don't fill us with confidence. 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. Our analysis shows 3 warning signs for Mahickra Chemicals (2 shouldn't be ignored!) and we strongly recommend you look at them before investing.

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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.