Top Shariah-Compliant Stocks in India: Part 1

India’s equity market continues to draw global attention with strong corporate earnings, robust domestic demand, and relative policy stability. 

Despite short-term volatility linked to geopolitical tensions and market restructuring, investor sentiment remains positive – especially in large-cap stocks with consistent profitability.

This article highlights five Shariah-compliant Indian stocks with the highest Earnings Per Share (EPS) among large- and mega-cap companies, screened for compliance with AAOIFI standards.

1. What Makes a Stock Halal?

To be considered halal, a stock must pass two key filters:

• Business activity screen: The company must avoid involvement in haram sectors like alcohol, gambling, interest-based finance, pork, and conventional insurance.
  
• Financial ratio screen: It should also pass interest-bearing debt-market capitalization, and non-compliant income screening.

These filters are applied before financial metrics like EPS are considered. All companies in this article have passed halal screening on platforms like Musaffa.[5]

2. Why Use EPS as a Filter?

Earnings Per Share (EPS) measures how much profit a company generates per share. It is calculated by dividing net income by the number of outstanding shares.[1]

EPS is particularly useful for halal investors because:

• It is applied only after verifying a stock’s halal status.
• It reflects core operational profitability.
• It removes distortions from one-off interest income or speculative gains.

It allows for comparison across compliant companies of similar size.

To maintain consistency, this list only includes large– and mega-cap companies to avoid EPS inflation from micro-caps with low share counts.

The EPS figures highlighted here reflect not just profitability but also sustained earnings performance over recent years. 

These figures underscore the consistent earnings power of India’s best-performing halal-compliant firms – each with stable or growing profitability over the past year.

3. Top 5 Halal-Compliant Indian Stocks by EPS

a) UltraTech Cement Ltd (ULTRACEMCO.NS)

EPS (2025): INR 223.3
UltraTech Cement is India’s largest manufacturer of grey cement and concrete. Its high EPS reflects dominant market share, price discipline, and operating leverage.[2]

b) Dixon Technologies India Ltd (DIXON.NS)

EPS (2025): INR 207.6
Dixon is a leading electronics manufacturer servicing consumer durables and mobile phones. EPS has grown due to strong demand in the electronics sector and supportive government policies like PLI (Production Linked Incentives).[2]

c) Sanofi India Ltd (SANOFI.NS)

EPS (2025): INR 156.1
Sanofi India, a leading pharmaceutical and vaccine provider, is the Indian subsidiary of the global healthcare giant. Its EPS reflects efficiency in operations, particularly in branded generics and chronic disease segments.[2]

d) Polycab India Ltd (POLYCAB.NS)

EPS (2025): INR 135.6
Polycab is India’s largest wire and cable manufacturer and has diversified into FMEG (fast-moving electrical goods). It maintains a healthy balance sheet. Its EPS reflects demand growth in infrastructure and real estate development.[2]

e) Procter & Gamble Health Ltd (PGHL.NS)

EPS (2025): INR 150.8
PGHL, part of Procter & Gamble’s consumer healthcare division, focuses on over-the-counter medicines and vitamins. The company’s EPS has improved with brand-driven pricing power and operational streamlining.[2]

4. India’s Market Outlook: Short-Term Friction, Long-Term Fundamentals

India’s markets have faced recent volatility due to the BSE–NSE derivatives expiry reshuffle, which may affect short-term volumes. While this change primarily affects derivatives trading, it has little bearing on the long-term fundamentals of the underlying companies.[3] 

However, broader fundamentals remain strong:

• Corporate profit margins are expected to hold in the 18.2%–18.5% range in the June quarter, driven by easing input costs and robust demand.[4]
• Mutual funds are actively buying consumer-facing stocks, reflecting growing optimism about domestic sentiment.
• Sectors like electronics, EVs, and specialty manufacturing are expected to attract sustained investment, boosted by government incentives and declining interest rates.

While the expiry-day change could dent volumes temporarily, India’s capital markets remain underpinned by economic resilience and retail participation.

5. Conclusion

India’s large- and mega-cap companies offer halal investors a chance to participate in one of the world’s most promising economies. The five stocks listed here have passed Shariah screening and offer high EPS, low leverage, and sectoral alignment with Islamic principles.

As always, halal status is dynamic. Debt ratios and business activities may evolve. Investors are advised to regularly check screening platforms like Musaffa and consult a financial advisor before making portfolio decisions.

For those seeking ethical returns aligned with strong fundamentals, India’s equity market deserves serious attention.

References

[1] Investopedia, “Earnings Per Share (EPS)”, https://www.investopedia.com/terms/e/eps.asp

[2] Musaffa Stock Screenings, https://musaffa.com/stocks

[3] Reuters, “India’s BSE slips as expiry day shift raises market share, profit hit concerns”, June 18, 2025

[4] Bloomberg, “India Market Buzz: Improved Earnings to Drive Smallcap Momentum”, June 18, 2025

Disclaimer: The content is for informational purposes only and does not constitute legal, investment or financial advice.
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