Insiders At Sudarshan Chemical Industries Sold ₹1.4b In Stock, Alluding To Potential Weakness

In the last year, many Sudarshan Chemical Industries Limited (NSE:SUDARSCHEM) insiders sold a substantial stake in the company which may have sparked shareholders' attention. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, if numerous insiders are selling, shareholders should investigate more.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for Sudarshan Chemical Industries

The Last 12 Months Of Insider Transactions At Sudarshan Chemical Industries

The insider, Ajoy Rathi, made the biggest insider sale in the last 12 months. That single transaction was for ₹1.4b worth of shares at a price of ₹776 each. That means that even when the share price was below the current price of ₹1,104, an insider wanted to cash in some shares. 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. It is worth noting that this sale was 61% of Ajoy Rathi's holding.

In the last year Sudarshan Chemical Industries insiders didn't buy any company stock. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).

Does Sudarshan Chemical Industries Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. It's great to see that Sudarshan Chemical Industries insiders own 44% of the company, worth about ₹33b. 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 Sudarshan Chemical Industries Insider Transactions Indicate?

The fact that there have been no Sudarshan Chemical Industries insider transactions recently certainly doesn't bother us. While we feel good about high insider ownership of Sudarshan Chemical Industries, we can't say the same about the selling of shares. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 2 warning signs for Sudarshan Chemical Industries you should be aware of.

Of course Sudarshan Chemical Industries may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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.