Insider Sales At Vimta Labs Landed A Good Price

While it’s been a great week for Vimta Labs Limited (NSE:VIMTALABS) shareholders after stock gained 21%, they should consider it with a grain of salt. Even though stock prices were relatively low, insiders elected to sell ₹11m worth of stock in the last year, which could indicate some expected downturn.

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 Vimta Labs

Vimta Labs Insider Transactions Over The Last Year

The insider, Vasireddi Prasad, made the biggest insider sale in the last 12 months. That single transaction was for ₹5.1m worth of shares at a price of ₹509 each. That means that an insider was selling shares at slightly below the current price (₹694). We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 0.6% of Vasireddi Prasad's holding.

In the last year Vimta Labs insiders didn't buy any company stock. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

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).

Insiders At Vimta Labs Have Sold Stock Recently

Over the last three months, we've seen a bit of insider selling at Vimta Labs. insider Muni Poola sold just ₹1.4m worth of shares in that time. Neither the lack of buying nor the presence of selling is heartening. But the volume sold is so low that it really doesn't bother us.

Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 34% of Vimta Labs shares, worth about ₹5.3b. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Does This Data Suggest About Vimta Labs Insiders?

An insider sold Vimta Labs shares recently, but they didn't buy any. And there weren't any purchases to give us comfort, over the last year. 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. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Vimta Labs. In terms of investment risks, we've identified 2 warning signs with Vimta Labs and understanding these should be part of your investment process.

But note: Vimta Labs 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.