Par Drugs and Chemicals Insiders Benefitted From Selling Stock At ₹224

While Par Drugs and Chemicals Limited (NSE:PAR) shareholders have had a good week with the stock up 19%, they shouldn't let their guards down. In spite of the relatively cheap prices, insiders made the decision to sell ₹23m worth of stock in the last 12 months. This could be a warning indicator of vulnerabilities in the future.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for Par Drugs and Chemicals

The Last 12 Months Of Insider Transactions At Par Drugs and Chemicals

The CEO & Executive Director, Jignesh Savani, made the biggest insider sale in the last 12 months. That single transaction was for ₹23m worth of shares at a price of ₹231 each. So it's clear an insider wanted to take some cash off the table, even below the current price of ₹348. 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. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. We note that the biggest single sale was only 1.9% of Jignesh Savani's holding. The only individual insider seller over the last year was Jignesh Savani.

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!

For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.

Insider Ownership Of Par Drugs and Chemicals

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Par Drugs and Chemicals insiders own about ₹3.4b worth of shares (which is 79% of the company). 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 Par Drugs and Chemicals Insiders?

It doesn't really mean much that no insider has traded Par Drugs and Chemicals shares in the last quarter. It's heartening that insiders own plenty of stock, but we'd like to see more insider buying, since the last year of Par Drugs and Chemicals insider transactions don't fill us with confidence. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Par Drugs and Chemicals. When we did our research, we found 2 warning signs for Par Drugs and Chemicals (1 doesn't sit too well with us!) 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 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.