Insiders Could Have Profited By Holding onto Ganga Forging Shares Despite 11% Drop - Simply Wall St News

Ganga Forging Limited's (NSE:GANGAFORGE) stock price has dropped 11% in the previous week, but insiders who sold ₹76m in stock over the past year have had less luck. Insiders might have been better off holding onto their shares, given that the average selling price of ₹8.90 is still below the current share price.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for Ganga Forging

In the last twelve months, the biggest single sale by an insider was when the insider, Manishkumar Nar, sold ₹41m worth of shares at a price of ₹7.50 per share. So what is clear is that an insider saw fit to sell at around the current price of ₹6.89. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign.

In total, Ganga Forging insiders sold more than they bought over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

I will like Ganga Forging better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Over the last three months, we've seen significant insider selling at Ganga Forging. In total, insider Shitalben Nar sold ₹6.3m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that Ganga Forging insiders own 41% of the company, worth about ₹382m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

An insider hasn't bought Ganga Forging stock in the last three months, but there was some selling. Zooming out, the longer term picture doesn't give us much comfort. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. 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. In terms of investment risks, we've identified 5 warning signs with Ganga Forging and understanding them should be part of your investment process.

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 of direct interests only, but not derivative transactions or indirect interests.

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Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.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.

Manufactures and sells steel forging parts and machine components for automotive and non-automotive sectors in India.

Moderate with adequate balance sheet.