Don't Ignore The Insider Selling In Divi's Laboratories

Some Divi's Laboratories Limited (NSE:DIVISLAB) shareholders may be a little concerned to see that insider Madhusudana Divi recently sold a substantial ₹59m worth of stock at a price of ₹4,888 per share. However, it's crucial to note that they remain very much invested in the stock and that sale only reduced their holding by 5.9%.

View our latest analysis for Divi's Laboratories

The Last 12 Months Of Insider Transactions At Divi's Laboratories

In fact, the recent sale by insider Madhusudana Divi was not their only sale of Divi's Laboratories shares this year. Earlier in the year, they fetched ₹4,336 per share in a -₹238m sale. So it's clear an insider wanted to take some cash off the table, even below the current price of ₹4,662. 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. This single sale was just 21% of Madhusudana Divi's stake.

In the last year Divi's Laboratories 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!

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Insider Ownership Of Divi's Laboratories

Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that Divi's Laboratories insiders own 49% of the company, worth about ₹635b. 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 Does This Data Suggest About Divi's Laboratories Insiders?

Insiders haven't bought Divi's Laboratories 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 Divi's Laboratories 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. At Simply Wall St, we found 2 warning signs for Divi's Laboratories that deserve your attention before buying any shares.

Of course Divi's Laboratories 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.