5 Indian Companies Where Insiders Are Selling: What Investors Need to Know?

Amid a notable surge in the market's performance, a noteworthy development has emerged, capturing the attention of investors: Insider selling.

Insiders, particularly those within smaller companies, have been seizing the opportunity to capitalise on the recent surge in market value, and in doing so, they have been offloading shares of their own companies.

The insiders from over 100 different companies are divesting shares worth more than Rs 160 bn in the open market.

This raises intriguing questions about the motivations and implications of such insider selling.

In this article, we take a closer look at five companies that display this prevalent trend.

#1 Mahindra Holidays & Resorts

First on the list is Mahindra Holidays & Resorts.

Mahindra Holidays & Resorts India is a leading player in the leisure hospitality industry.

The company has established vacation ownership business in India and is a market leader in the business with over 2.65 lakh members and 84 resorts.

On 5 September 2023, Kavinder Singh, the director of Mahindra Holidays & Resorts, executed a significant transaction. He sold 10,000 shares from his holdings in the open market, fetching approximately Rs 4.1 million per share.

This divestment was carried out at an average price of Rs 408.4 per share, resulting in a reduction of his stake to 0.14%.

This, however, wasn't the director's first move. On 28 August 2023, he offloaded 30,000 shares at an average trading price of Rs 404.9 per share, amounting to Rs 12.1 m.

The company reported a marginal 2% rise in revenue, reaching Rs 6.5 billion (bn) for the June 2023 quarter, while the net profit for the same period stood at Rs 89 million, marking a decline of 70.2% year-on-year.

Despite these financial figures, Mahindra Holidays has seen its stock consistently rise within an upward channel, achieving a remarkable 38% increase in share price over the past year, with a notable 19% surge in just the last month.

Looking ahead, the company is poised to launch a new resort brand, capitalizing on the growing number of travelers in the country.

For more details, see the Mahindra Holidays company fact sheet and quarterly results.

#2 NGL Fine-Chem

Second on the list is NGL Fine-Chem.

NGL Fine-Chem manufactures pharmaceuticals and intermediates for use in veterinary and human health.

The company caters to various global companies to custom manufacture high-quality pharmaceuticals with reliability and flexibility.

Sunita Potdar, a member of the promoter group, made significant moves in September 2023. On 5 September, she sold 8,600 shares at an average price of Rs 2,228.7, totaling Rs 19.1 m.

The following day, on 6 September 2023, she divested 9,348 shares at an average price of Rs 2,122.3, aggregating Rs 19.8 m. Following these transactions, her stake in the company stands at 13.89%.

NGL Fine-Chem is currently facing margin pressure due to the nature of its raw materials, including intermediaries and solvents used in API manufacturing.

Short-term contracts expose the company's operating profitability to fluctuations in raw material prices, leading to a considerable contraction in operating margins to 9.2% in 9M FY2023, compared to 21.5% in FY22.

However, the June 2023 quarter brought a 9.7% year-on-year increase in revenue, reaching Rs 743.6 million, and a significant surge in net profit to Rs 85.1 million, a staggering 1,543.2% growth.

The company's stock has witnessed a remarkable upswing of over 34% in the past year, with a substantial portion of this rally occurring in the last six months.

NGL Fine-chem is one stocks that has turned 5 lakh to 5 crore in 10 years.

Looking forward, the company plans to invest in a greenfield expansion project in Tarapur, Maharashtra, with an estimated cost of approximately Rs 1.4 bn, funded through a combination of debt and internal accruals.

For more details, see the NGL FINE CHM company fact sheet and quarterly results.

#3 TeamLease Services

Third on the list is TeamLease Services.

TeamLease Services is one of India's leading people supply chain companies.

The company offers temporary staffing, permanent recruitment, payroll process outsourcing, regulatory compliances, assessment, and corporate training services.

Director Rituparna Chakraborty recently made some notable stock transactions, selling approximately 2,015 shares at an average rate of Rs 2,463.3 per share, along with an earlier sale of around 283 shares at an average price of Rs 2,459.

These divestments brought her total ownership in the company down to 0.64%.

This mirrors a consistent trend of stake reduction by foreign institutional investors (FIIs), with FII ownership declining from 37.2% in December 2022 to 36.5% currently.

Look at the table below.

Quarter ending	21-Dec	22-Mar	22-Jun	22-Sep	22-Dec	23-Mar	23-Jun
Stake (%)	38.2	37.4	37.3	37.1	37.3	36.5	32.7

Data Source: Equitymaster

In terms of financial performance, for the June 2023 quarter, TeamLease Services reported a 15.5% growth in revenue, amounting to Rs 21.7 bn. However, the net profit witnessed a slight decline of 0.5%, reaching Rs 264 m.

The company reported a lower profit for a third straight quarter on Wednesday, on weak demand for its specialised staffing services in the IT industry and as rising costs outweighed growth in its general staffing business.

The company's stock has been on a declining trend over the past year, eroding by 20%.

Looking ahead, TeamLease Services plans to intensify its focus on sectors such as artificial intelligence, healthcare, and manufacturing for staffing and recruiting services.

For more details, see the Teamlease Services company fact sheet and quarterly results.

#4 Talbros Engineering

Fourth on the list is Talbros Engineering.

Talbros Engineering is engaged in manufacturing of Rear Axle Shafts for the automobile companies in India and foreign markets. The company operates in only one segment namely Automobile Components.

Nain Talwar, the promoter of Talbros Engineering, recently sold around 1,000 shares at an average price of Rs 770, reducing his stake in the company to 5.6%.

The company reported a 14.4% year-on-year decline in revenue for the June 2023 quarter, amounting to Rs 968.5 m. The net profit for the same period also experienced a substantial drop of 45.1% YoY, reaching Rs 45.5 m.

The shares of the company have surged over 20% in the past year.

Talbros Engineering aims to enhance its market presence in India and abroad by expanding its sales and marketing efforts and forging new partnerships with original equipment manufacturers (OEMs).

For more details, see the Talbros Eng company fact sheet and quarterly results.

#5 SBFC Finance

Last on the list is SBFC Finance.

SBFC Finance is a non-banking financial company (NBFC) that provides loans to small businesses and consumers. The company has a presence in over 20 states in India.

Aseem Dhru, the company's director, sold 8,250,000 shares at an average price of Rs 85 per share, aggregating to Rs 701.3 m.

The financial services company's net profit saw a remarkable rise of 47%, reaching Rs 469.6 m in the June 2023 quarter.

The financial service provider's Net Interest Income (NII) surged to Rs 1.2 bn, representing a substantial growth of 43.7% YoY.

In addition to these impressive financial figures, the company received board approval for an investment in its subsidiary, SHFL, presumably SBFC Home Finance. This investment involves an equity share capital infusion of Rs 210 m.

SBFC Finance launched its IPO on 3 August 2023 and listed on 16 August 2023. Since then the shares of the company have been on the downtrend.

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Looking ahead, SBFC Finance's strategic focus lies in expanding its market share within India.

For more details, see the SBFC Finance company fact sheet and quarterly results.

To conclude

Insider selling provides valuable insights into the confidence and perceptions of company insiders. It indicates market sentiment, economic health within specific sectors, and regulatory compliance.

For investors, monitoring insider selling can inform investment decisions and contribute to a comprehensive assessment of a company's long-term viability, and stability.

When considered alongside other factors, it contributes to a more comprehensive assessment of a company's health.

However, investors must exercise caution and conduct thorough research and analysis before making an investment decision.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...