An important question comes to the mind of stock market investors, especially Muslim investors: “Is Reliance stock halal or not?” According to me, Reliance stock is not considered halal right now. In this article, we will try to understand whether Reliance is a halal stock.
Halal stocks are those that are permissible according to Shariah law. This means that:
The company’s primary business must not be haram activities. Such as alcohol, gambling, pork products, or interest-based financial services,
The company’s financial ratios must also be in line with Islamic principles. Such as:
Debt-to-equity ratio should be limited.
Interest-based income should be below a specific threshold (most guidelines say less than 5%)
Is Reliance's business halal or haram?
Reliance Industries is a diversified company that operates in many sectors like oil and gas, petrochemicals, telecom (Jio), retail and now green energy. Reliance’s core business is oil refining and petrochemicals, but now it has become a major player in telecom and retail as well.
Reliance’s core business is Halal as per Sharia law
Analysis of Financial Ratios
We look at the financial reports of Reliance Industries which is very important for Halal stocks
Debt levels: Reliance has reduced its debt significantly over the years, but still has 44% debt on the balance sheet
For any Halal stock, the debt-to-equity ratio should be within 33%
Interest-based income: The company’s financial division and investments generate interest income, but its percentage is less than the company’s total revenu
A lot of the company’s business is halal, but some income also comes from interest
According to Sharia principles, interest income should be 5%.
It is difficult to know how much interest-based income Reliance has
Final Verdict
Reliance is a very big company in India, apart from oil and gas, it is also at the top in the telecom sector. It is a part of NSE’s Nifty 50. Its market capital is around Rs 16,38,635 crore.
This is the reason why many stock advisors consider Reliance to be a halal stock. Reliance Industries’ core business may be halal, but if we look at the debt and financial ratios, it is not completely Sharia compliant. Islamic investors should consult their personal Sharia advisor.
disclaimer
I have done all this analysis as per my understanding.
Invest in any stock as per your risk and consult your financial advisor.
Do you think Reliance is a Halal stock?
Want to know about any other stock? Comment below.
