Don't Ignore The Fact That This Insider Just Sold Some Shares In Neogen Chemicals Limited (NSE:NEOGEN)

We'd be surprised if Neogen Chemicals Limited (NSE:NEOGEN) shareholders haven't noticed that an insider, Radhika Surana, recently sold ₹7.8m worth of stock at ₹748 per share. On the bright side, that sale was only 5.2% of their holding, so we doubt it's very meaningful, on its own.

View our latest analysis for Neogen Chemicals

The Last 12 Months Of Insider Transactions At Neogen Chemicals

Over the last year, we can see that the biggest insider sale was by the Chairman & MD, Haridas Kanani, for ₹344m worth of shares, at about ₹474 per share. That means that even when the share price was below the current price of ₹733, 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 5.1% of Haridas Kanani's holding.

Insiders in Neogen Chemicals didn't buy any shares in the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

I will like Neogen Chemicals 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 Neogen Chemicals Boast High Insider Ownership?

Many investors like to check how much of a company is owned by 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. It's great to see that Neogen Chemicals insiders own 68% of the company, worth about ₹11b. 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 Neogen Chemicals Insider Transactions Indicate?

An insider hasn't bought Neogen Chemicals stock in the last three months, but there was some selling. And there weren't any purchases to give us comfort, over the last year. But since Neogen Chemicals is profitable and growing, we're not too worried by this. 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. When we did our research, we found 3 warning signs for Neogen Chemicals (1 can't be ignored!) that we believe deserve your full attention.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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, but not derivative transactions.

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