Halal Stock Screening & Ratings

Last updated 10 months ago

Halal Stock Screening

Musaffa’s Halal stock screening process helps investors identify stocks that meet Islamic investing principles. Each stock is categorized into one of the following:

  • Halal: Passes Shariah screening based on financial ratios and business activities.

  • Not Halal: Fails to meet one or more key Shariah criteria.

  • Doubtful: Unclear or borderline cases due to lack of data or mixed business activities.

To determine whether a stock is Halal, we assess:

  • Interest-bearing debt ratio

  • Interest-bearing assets ratio

  • Non-permissible income (e.g., alcohol, gambling, conventional banking)

    Only stocks that meet the globally accepted thresholds in all three categories are marked as Halal.

Not All Halal Stocks Are Equal

While Halal classification confirms that a stock is Shariah-compliant, it doesn't tell the full story. Some Halal companies stay well within Islamic financial guidelines, while others barely meet the minimum requirements.

For example:
Two students may both pass a test with 75% as the minimum score—one gets 100%, the other just makes it with 75%. Technically, both pass, but the level of mastery is clearly different.

The same applies to Halal stocks. To provide deeper insight into the degree of compliance, we created the Musaffa Halal Rating.

Musaffa Halal Rating

The Musaffa Halal Rating is a proprietary ranking system that goes beyond binary Halal classification. It evaluates the financial purity of Halal stocks based on:

  • Interest-bearing debt levels

  • Interest-bearing assets

  • Non-permissible revenue

Each Halal stock is assigned one of nine ratings:

A+, A, A-, B+, B, B-, C+, C, C-

  • A+: Stocks with the strongest compliance, far from any Shariah threshold

  • C-: Stocks that are technically Halal, but close to the maximum limits allowed

Real Examples

Eaton Corporation – Rated A+

  • Non-permissible revenue: ~1% (limit: 5%)

  • Interest-bearing assets: 2.2% (limit: 30%)

  • Interest-bearing debt: 10% (limit: 30%)

Eaton stays well below all thresholds, making it a highly Shariah-compliant stock.

Gilead Sciences – Rated C-

  • Non-permissible revenue: 1.41%

  • Interest-bearing assets: 10.25%

  • Interest-bearing debt: 27.40%

Although it qualifies as Halal, Gilead operates close to the limits—earning it a lower rating.

Why It Matters

The Musaffa Halal Rating helps you:

✅ Identify stocks with the strongest Shariah alignment
✅ Compare Halal stocks more effectively across sectors and countries
✅ Build a portfolio that aligns with both your faith and financial goals

By offering a detailed breakdown of financial compliance, our rating system ensures that your Halal investments are not only permissible—but also ethically sound.

Start Exploring

Explore Halal Ratings on musaffa.com and make more informed, faith-aligned investment decisions.