Are Insiders Selling RBL Bank Limited (NSE:RBLBANK) Stock?

Joel Foster

Wed, Feb 6, 2019, 10:57 PM

We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we’ll take a look at whether insiders have been buying or selling shares in RBL Bank Limited (NSE:RBLBANK).

Do Insider Transactions Matter?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.

View our latest analysis for RBL Bank

RBL Bank Insider Transactions Over The Last Year

Head of Strategy Rajeev Ahuja made the biggest insider sale in the last 12 months. That single transaction was for ₹146m worth of shares at a price of ₹558 each. That means that even when the share price was below the current price of ₹584, an insider wanted to cash in some shares. Even though it doesn’t necessarily mean anything, that’s certainly not a positive sign, in our book. When an insider sells below the current price, it does tend to make us wonder about the current valuation. Please note, however, that this single sale was just 5.1% of Rajeev Ahuja’s stake.

Happily, we note that in the last year insiders paid ₹4.7m for 22.41k shares. On the other hand they divested 4.89m shares, for ₹2.7b. All up, insiders sold more shares in RBL Bank than they bought, over the last year. The average sell price was around ₹551. It’s not particularly great to see insiders were selling shares at below recent prices. Of course, the sales could be motivated for a multitude of reasons, so we shouldn’t jump to conclusions. You can see the insider transactions (by 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!