Divi's Laboratories Insiders Sell ₹511m Of Stock, Possibly Signalling Caution

Over the past year, many Divi's Laboratories Limited (NSE:DIVISLAB) insiders sold a significant stake in the company which may have piqued investors' interest. When evaluating insider transactions, knowing whether insiders are buying versus if they selling is usually more beneficial, as the latter can be open to many interpretations. However, if numerous insiders are selling, shareholders should investigate more.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for Divi's Laboratories

Divi's Laboratories Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the insider, Nimmagadda Anirudh, for ₹112m worth of shares, at about ₹3,734 per share. So what is clear is that an insider saw fit to sell at around the current price of ₹3,431. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign.

Insiders in Divi's Laboratories didn't buy any shares in the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

I will like Divi's Laboratories better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Divi's Laboratories Insiders Are Selling The Stock

Over the last three months, we've seen significant insider selling at Divi's Laboratories. Specifically, insiders ditched ₹302m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Insider Ownership Of Divi's Laboratories

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. Divi's Laboratories insiders own 46% of the company, currently worth about ₹423b based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At Divi's Laboratories Tell Us?

Insiders sold Divi's Laboratories shares recently, but they didn't buy any. And even if we look at the last year, we didn't see any purchases. It is good to see high insider ownership, but the insider selling leaves us cautious. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Divi's Laboratories. You'd be interested to know, that we found 3 warning signs for Divi's Laboratories and we suggest you have a look.

But note: Divi's Laboratories 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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