Insiders Give Up ₹2.9m As Shankara Building Products Stock Drops To ₹456

The recent 11% drop in Shankara Building Products Limited's (NSE:SHANKARA) stock could come as a blow to insiders who purchased ₹7.46m worth of stock at an average buy price of ₹739 over the past 12 months. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only ₹4.61m.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

See our latest analysis for Shankara Building Products

The Last 12 Months Of Insider Transactions At Shankara Building Products

In the last twelve months, the biggest single purchase by an insider was when Founder Sukumar Srinivas bought ₹7.4m worth of shares at a price of ₹740 per share. That means that even when the share price was higher than ₹456 (the recent price), an insider wanted to purchase shares. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. To us, it's very important to consider the price insiders pay for shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

While Shankara Building Products insiders bought shares during the last year, they didn't sell. 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!

Shankara Building Products is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.

Have Shankara Building Products Insiders Traded Recently?

insider Agfa CN bought just ₹58k worth of shares in that time. That's not much at all. Overall, we don't think these recent trades are particularly informative, one way or the other.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Shankara Building Products insiders own about ₹5.9b worth of shares (which is 53% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Do The Shankara Building Products Insider Transactions Indicate?

It is good to see the recent insider purchase. And the longer term insider transactions also give us confidence. When combined with notable insider ownership, these factors suggest Shankara Building Products insiders are well aligned, and quite possibly think the share price is too low. Nice! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Shankara Building Products. In terms of investment risks, we've identified 2 warning signs with Shankara Building Products and understanding them should be part of your investment process.

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.