How to invest in Microsoft (MSFT) shares directly from India?
April 27 2022 - Team Stockal
Invest in Microsoft shares directly from India
Popularly found in each office or household computer or laptop, Microsoft is one of the most popular tech companies in the world. With widely used products like Windows and Office, Microsoft has marked its presence in almost every computer and laptop across the globe. The software giant Microsoft has done amazingly well in the last seven years since the Indian origin CEO Satya Nadella has taken charge. Its stock price had shown a major breakout since 2017 when major investors started to see fresh value addition in the stock and considered investing in Microsoft. That took its total returns since inception, to 2,78,000%. Yes! You read that correctly.
Revenues from their products back these returns. Apart from Windows and Office, Microsoft offers many more products. They are –
- Consumer service software like Skype, Outlook.com.
- Dynamic business solutions such as financial management, supply chain management (SCM), customer relationship management (CRM), etc.
- Gaming platforms such as Xbox hardware and Xbox Live.
- LinkedIn, a social network for professionals.
- One, the Cloud Service such as OneDrive, and
- A web browser, Edge.
The above list is not exhaustive. With numerous products and leading-edge technologies, Microsoft is a tech giant that has given significant returns to its investors. While the company’s performance is likely to grow, how does one invest in Microsoft shares in India? Well, Stockal has made it simple to invest in the U.S. stock market for Indian investors.
Let’s go ahead and learn more about the performance before you plan on investing in Microsoft shares.
About Microsoft Stock
The shares of Microsoft are listed on the U.S. stock exchanges with a ticker name – MSFT. As of March 8, 2022, Microsoft stock is trading at $278.91. The five-year return of Microsoft has been around 329.55%. However, the year-to-date (YTD) return has been negative, 16.68%, due to the rising inflation concerns and geopolitical tensions between Russia and Ukraine. However, while the tech-savvy Nasdaq has corrected and has given a return of only 1.76% in one year, Microsoft stock has returned more than 22.6% in one year. This outperformance compared to the index displays the fundamental strength of the Microsoft stock.
The stock chart of Microsoft since its listing is given below.
(Source: Google Finance)
Microsoft’s market capitalization at the price level of $278.91 is recorded at $2.09 trillion. Their dividend yield is 0.89%, and their Price to Earnings (P/E) Ratio is 29.67 times. Microsoft is a constituent of the Nasdaq index with a weightage of 10.214%.
The company’s stocks are technically and fundamentally strong as well as the business of Microsoft is compelling. What about the recent developments affecting their future growth? Let’s go ahead and find out.
Microsoft – Recent Developments
As far as the recent developments about Microsoft is concerned, the company has acquired three land parcels in Hyderabad, with a vision to develop the largest data center in India. This data center will be in addition to the three major centers it has already set up in India in Pune, Mumbai, and Chennai. This is in line with their bigger plan to expand the data center business in developing countries like India. The expansion can add a new source of revenue for the company.
Apart from that, Microsoft has also successfully acquired Nuance Communications Inc, which develops speech recognition software for a valuation of $19.7 billion. The company’s plan with this acquisition is to create personalized customer experiences. With the acquisition of gaming behemoth Activision Blizzard, Microsoft’s biggest acquisition yet for $68.7 bn, the company plans to grow its gaming business and will also play a pivotal role in building the metaverse.
Well, these recent developments seem promising and could likely make the company’s profitability higher in the coming years. So, should you buy the Microsoft shares today as of today? Let’s find out.
Should you invest in Microsoft Shares?
Today, many global investors are seeking opportunities from different financial markets around the world to earn superior returns. While the U.S. stock market has a higher potential for return on investment, Microsoft stock has always remained a safe choice for many amongst all Nasdaq stocks. It is one of the fundamentally strong stocks that must be on your radar. As per the recent market trend, the tech giants are the ones to offer maximum returns and Microsoft is one of them.
You can invest in Microsoft for either short-term profits or long-term gains. You must note that a short-term profit could be riskier than investing for the long term, and more often than not, staying invested for a long period in Microsoft has often provided more rewards than short-term trading. It is apparent from the stock chart provided above where you can see the trend of Microsoft shares.
So, if you are planning to invest in Microsoft shares in India for the long term, there are certain benefits you would enjoy. Along with superior returns that the US stock market offers, you can also make the most out of dollar appreciation. Meaning that, if you invest Rs. 1,000 when the dollar value is Rs. 70, your investment will become Rs. 1,085.71 when the dollar appreciates to Rs. 76.
Moreover, you can also invest in fractional shares of Microsoft. What this means for you is that you can become an investor by buying a fraction of a share and still enjoy all the benefits of stock ownership. You can gain the same percentage of return and also bear the same risk as the owner of a full share. Stockal offers you the flexibility to invest in fractional shares and over that, it also gives you an opportunity to earn 2-3% interest on the savings in your account.
Now you can make an investment of as low as $1 and accumulate Microsoft shares in small quantities for the long term. If you’re still doubtful whether investing in Microsoft shares is still a good idea, then let us look at the benefits of investing in it below.
Benefits of Investing in Microsoft Shares
Many rating agencies and top investment portfolio managers have a robust buy-and-hold view of Microsoft shares. The industry experts believe that the position of Microsoft is so strong in the market that the risk involved is low. Since the investments are always assessed in terms of risk and reward, the probability of earning a higher reward from Microsoft investment is higher than the risk involved.
In March 2020, the Microsoft stock had touched the $137 mark. Since then, the stock price has come up to $289.86, giving about 111% gains in two years span by March 2022. In the last one year, the stock has outperformed Nasdaq, the benchmark tech index. Moreover, the top rating agencies from Moody’s to Standard and Poor’s have a positive bias about Microsoft’s investments due to its strong capital position in the tech industry.
Let’s discuss how Microsoft has performed financially in the past few years.
Microsoft Financial Performance
Firstly, we shall discuss the results for Q4 of FY 2021 and proceed with a multi-year comparison. For the final quarter of 2021, Microsoft’s revenue increased from $45,317 million to $51,728 million. However, their net income came down from $20,505 million to $18,765 million. Despite the rise in revenue, the net income was low. This was on account of increased expenditure for Q4. You can glance at the Q4 numbers from the comparative bar chart below.
Upon performing a comparative analysis of Microsoft’s performance on an annual basis, we can safely conclude that the company’s financial status is growing stronger each year. Year-on-year since 2018, Microsoft’s total revenue, gross profit, operating income, and net income have been consistently increasing. You can take a look at the extract of its Income Statement, Balance Sheet, and Cash Flow Statement from June 2018 through June 2021.
Numbers in millions (Source: Investing.com)
On closer look, you can find out that the net cash flows of Microsoft have not been remarkably consistent. However, it does not make a significant difference since the cash flows from operating activities have been positive throughout the period, with a rise in operating incomes as well. This indicates that the operating activities such as services, selling the flagship products etc., have generated consistent cash flows irrespective of the negative cash flows from investing and financing activities.
To sum it up
For a global investor from India, Microsoft is a good investment option since it allows geographical diversification. Along with that, if you invest in Microsoft shares from India, you get an advantage of dollar appreciation. As of March 2022, one stock of Microsoft is available for $278.91. That comes to around Rs. 21,198 at an exchange rate of Rs. 76 per U.S. dollar.
However, you do not need to invest that enormous amount in its shares. With Stockal, you can do fractional investing in U.S. stocks( buying a fraction of a whole stock). Simply create an account and invest as small as $1 in Microsoft shares. You can keep accumulating fundamentally strong shares like Microsoft as and when the prices correct by tracking real-time prices on the Stockal app. However, ensure that you calculate your risks before making any investment.
To learn more, you can visit Stockal’s website here.