KPIT Technologies Limited (NSE:KPITTECH) insiders sold ₹78m worth of stock last year which shareholders may not want to overlook

Simply Wall St
March 21, 2022
Source: Shutterstock

While it’s been a great week for KPIT Technologies Limited (NSE:KPITTECH) shareholders after stock gained 3.4%, they should consider it with a grain of salt. The fact that insiders chose to dispose of ₹78m worth of stock in the past 12 months even though prices were relatively low could be indicative of some anticipated weakness.

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.

View our latest analysis for KPIT Technologies

The Last 12 Months Of Insider Transactions At KPIT Technologies

The President & Whole-Time Director, Sachin Tikekar, made the biggest insider sale in the last 12 months. That single transaction was for ₹51m worth of shares at a price of ₹513 each. So it's clear an insider wanted to take some cash off the table, even below the current price of ₹585. 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 12% of Sachin Tikekar's holding.

Insiders in KPIT Technologies didn't buy any shares in the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

NSEI:KPITTECH Insider Trading Volume March 21st 2022

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

KPIT Technologies Insiders Are Selling The Stock

Over the last three months, we've seen a bit of insider selling at KPIT Technologies. insider Samir Kulkarni sold just ₹3.1m 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

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that KPIT Technologies insiders own 8.9% of the company, worth about ₹14b. 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 Do The KPIT Technologies Insider Transactions Indicate?

An insider sold KPIT Technologies shares recently, but they didn't buy any. Looking to the last twelve months, our data doesn't show any insider buying. But since KPIT Technologies is profitable and growing, we're not too worried by this. 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 KPIT Technologies. Every company has risks, and we've spotted 2 warning signs for KPIT Technologies you should know about.

Of course KPIT Technologies may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.