Balachandran Krishnan, Founder and Chief Financial Officer, IRIS Business Services, has announced a trading plan for selling some of his shares between August of this year and the next.
Krishnan has informed the exchanges he will sell 2,00,000 equity shares of the company in one or more tranches. As of September end of 2022, Krishnan owned 11,04,000 shares, or a 5.7 percent stake, in the company. Overall, the promoter group held a 38 percent stake in IRIS Business Services.
The trading plan
This is one of the rare instances when a promoter has given a schedule for selling his holdings. A trading plan once approved is binding on the person filing such a plan.
According to Regulation 5(4) of SEBI (PIT) Regulations, “Any trading plan once approved shall be irrevocable and it shall be mandatorily implemented, without being entitled to either deviate from it or to execute any trade in the securities outside the scope of the trading plan.” Also, no trading by the entity will be permitted for six months till the start date of the trading plan.
Investors closely track the sale and purchase of shares by company insiders, as it is considered an indicator of the management’s outlook on the company’s prospects, and hence of the share price.
Conventional market wisdom, however, suggests that buying by insiders is a more reliable indicator of undervaluation than insider selling is an indicator of overvaluation.
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The Mumbai-headquartered company is a regulatory compliance solutions provider with a footprint in over 44 countries. The company’s stock was listed on November 8, 2021, on the Main Board of the NSE and BSE.
As of March 31, 2022, the company’s market capitalisation stood at around Rs 194 crore with an order book of about Rs 67 crore. The stock closed at Rs 75.50 on the BSE on January 12.
On January 13, the scrip was trading at Rs 76.75, up 0.5 percent on the BSE at at 9.49 am.
The stock has been closing lower for the past three trading sessions.
Market participants believe that the practice of intimating about the share sale helps maintain basic hygiene.
“If the market capitalisation is very small, there are high chances of stock price manipulation whenever a big investor buys or sells shares of the company,” said an independent market expert.