Nowadays many people invest in the stock market and some of them want to invest according to Islamic principles. According to Islamic finance, every investment must be according to Sharia principles. We want to know whether Reliance shares are halal or not
- The business should be Halal, the company’s business should be according to Islam, for example investing in a company related to alcohol, gumming, pork products or interest based financial services is haram
- Interest based income ratio should be low. If a part of the company’s revenue comes from interest income and its limit generally goes above 5% then that stock will not be considered Halal
- Debt to equity ratio: The company’s debit should not be too high. According to Sharia scholars, the debt to equity ratio should be within 33%.
Reliance Stock Fundamentals
- Mkt Cap रू 17,38,842 Cr
- P/E Ratio 25.60
- P/B Ratio 2.21
- Industry P/E 21.31
- Debt to Equity 0.44
- ROE 8.29%
- EPS 50.19
- Div Yield 0.39%
- Book Value 605.55
- Face Value 10
Analysis of Reliance Industries
Reliance Industries is a diversified company
- Refinery
- Oil & Gas
- Telecom Sector,
- Retail Sector
- Digital Services
- This is a very big company of India, its business is spread across many countries
Its owner is Mukesh Ambani
Jio is India’s largest company in the telecom sector. The launch of Reliance Jio in 2016 was a major turning point, which revolutionized the telecom industry. Jio’s affordable plans connected millions of users in India to the digital world.
Reliance is also very strong in the retail sector
Reliance also has a global presence in the petrochemicals and refining business and its refinery complex at Jamnagar in Gujarat is the largest in the world.
Is Reliance stock halal or not from Islamic point of view?
- Main business activities
This business of Reliance can be considered halal because it works in industries like oil, petrochemical, telecom and retail. There is nothing haram in these sectors.
But there is another work in Reliance which is haram in Islam. The name of that sector is Reliance Entertainment. But Reliance Entertainment is not a core business.
- Interest-based transactions
Reliance Industries has very high debt
High debt does not fall in the category of Shariah compliant which should be less than 33%
- Financial Ratios
Reliance does not appear to be fully Sharia compliant if the financier statement debt, equity and interest income are viewed as per Islamic standards
What should be done
Keep some things in mind before investing in Reliance Industries shares
- Always check the financial data and debt of Reliance Industries
- If your investment has any part of interest based income, then purify that portion of interest based income.
Final Verdict
Reliance Industries is India’s largest company, its main business may be halal but if we look at the debt and finance ratio, it is not completely Sharia compliant. Before investing in this stock, one should consult an Islamic investor or a private Sharia advisor, only then invest in Reliance.
Do you think Reliance shares will be considered halal? It should be in the list of Shariah-compliant. Write in the comments which stock you want to know about
