Don't Ignore The Fact That This Insider Just Sold Some Shares In Sterlite Technologies Limited (NSE:STLTECH)

Simply Wall St
September 26, 2021
Source: Shutterstock

We'd be surprised if Sterlite Technologies Limited (NSE:STLTECH) shareholders haven't noticed that the Group CEO & Whole-time Director, Anand Gopaldas Agarwal, recently sold ₹29m worth of stock at ₹291 per share. On the bright side, that sale was only 9.4% of their holding, so we doubt it's very meaningful, on its own.

View our latest analysis for Sterlite Technologies

The Last 12 Months Of Insider Transactions At Sterlite Technologies

Over the last year, we can see that the biggest insider sale was by the Vice Chairman, Pravin Agarwal, for ₹76m worth of shares, at about ₹254 per share. That means that even when the share price was below the current price of ₹291, 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. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. It is worth noting that this sale was 51% of Pravin Agarwal's holding.

Happily, we note that in the last year insiders paid ₹12m for 42.14k shares. But insiders sold 1.85m shares worth ₹421m. In total, Sterlite Technologies insiders sold more than they bought over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

NSEI:STLTECH Insider Trading Volume September 27th 2021

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

Insider Ownership of Sterlite Technologies

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 appears that Sterlite Technologies insiders own 3.0% of the company, worth about ₹3.5b. 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 Sterlite Technologies Insiders?

The stark truth for Sterlite Technologies is that there has been more insider selling than insider buying in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. On the plus side, Sterlite Technologies 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. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. You'd be interested to know, that we found 3 warning signs for Sterlite Technologies and we suggest you have a look.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.

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