Insiders sold Zota Health Care Limited (NSE:ZOTA) stock at a low of ₹282 , meanwhile current prices stay relatively expensive at ₹318

By
Simply Wall St
Published
February 22, 2022
NSEI:ZOTA
Source: Shutterstock

Zota Health Care Limited's (NSE:ZOTA) stock price has dropped 13% in the previous week, but insiders who sold ₹20m in stock over the past year have had less luck. Insiders would probably have been better off holding on to their shares given that the average selling price of ₹282 is still lower than the current share price.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for Zota Health Care

The Last 12 Months Of Insider Transactions At Zota Health Care

In the last twelve months, the biggest single sale by an insider was when the Chairman, Ketankumar Zota, sold ₹4.7m worth of shares at a price of ₹263 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of ₹318. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was only 0.4% of Ketankumar Zota's holding.

Happily, we note that in the last year insiders paid ₹4.1m for 20.20k shares. But insiders sold 70.13k shares worth ₹20m. Over the last year we saw more insider selling of Zota Health Care shares, than buying. 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!

insider-trading-volume
NSEI:ZOTA Insider Trading Volume February 22nd 2022

I will like Zota Health Care better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Insider Ownership of Zota Health Care

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. It's great to see that Zota Health Care insiders own 51% of the company, worth about ₹4.1b. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Does This Data Suggest About Zota Health Care Insiders?

The fact that there have been no Zota Health Care insider transactions recently certainly doesn't bother us. It's great to see high levels of insider ownership, but looking back over the last year, we don't gain confidence from the Zota Health Care insiders selling. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Zota Health Care. For example, Zota Health Care has 3 warning signs (and 1 which is a bit concerning) we think you should know about.

But note: Zota Health Care 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, but not derivative transactions.

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