Aditya Rao Spends ₹7.1m On Pennar Industries Stock

Even if it's not a huge purchase, we think it was good to see that Aditya Rao, the Vice Chairman & MD of Pennar Industries Limited (NSE:PENIND) recently shelled out ₹7.1m to buy stock, at ₹171 per share. Nevertheless, it only increased their shareholding by a minuscule percentage, and it wasn't a massive purchase by absolute value, either.

Check out our latest analysis for Pennar Industries

The Last 12 Months Of Insider Transactions At Pennar Industries

Notably, that recent purchase by Aditya Rao is the biggest insider purchase of Pennar Industries shares that we've seen in the last year. That means that an insider was happy to buy shares at above the current price of ₹169. It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. Aditya Rao was the only individual insider to buy during the last year.

Aditya Rao purchased 97.91k shares over the year. The average price per share was ₹144. 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!

There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insider Ownership Of Pennar Industries

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 30% of Pennar Industries shares, worth about ₹6.8b. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

What Might The Insider Transactions At Pennar Industries Tell Us?

It is good to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. When combined with notable insider ownership, these factors suggest Pennar Industries insiders are well aligned, and quite possibly think the share price is too low. Nice! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Our analysis shows 2 warning signs for Pennar Industries (1 is significant!) and we strongly recommend you look at them before investing.

But note: Pennar Industries 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.