Vimta Labs Insiders Make Handsome Sum Selling Stock At ₹758 Per Share

While Vimta Labs Limited (NSE:VIMTALABS) shareholders have enjoyed a good week with stock up 19%, they need remain vigilant. The fact that insiders chose to dispose of ₹30m worth of stock in the past 12 months even though prices were relatively low could be indicative of some anticipated weakness.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

We've discovered 1 warning sign about Vimta Labs. View them for free.

Vimta Labs Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the insider, Vasireddi Prasad, for ₹5.8m worth of shares, at about ₹828 per share. That means that even when the share price was below the current price of ₹1,153, 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 only 0.5% of Vasireddi Prasad's holding.

Vimta Labs insiders didn't buy any shares over the last year. 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!

Check out our latest analysis for Vimta Labs

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Vimta Labs Insiders Are Selling The Stock

Over the last three months, we've seen a bit of insider selling at Vimta Labs. Executive Director of Operations & Executive Director V. Vungal only netted ₹4.2m selling shares, in that period. Neither the lack of buying nor the presence of selling is heartening. But the amount sold isn't enough for us to put any weight on it.

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. A high insider ownership often makes company leadership more mindful of shareholder interests. Vimta Labs insiders own about ₹8.7b worth of shares (which is 34% 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 Do The Vimta Labs Insider Transactions Indicate?

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. On the plus side, Vimta Labs makes money, and is growing profits. 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. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Every company has risks, and we've spotted 1 warning sign for Vimta Labs you should know about.

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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.