The Short Answer
Coty stock (COTY) is doubtful for Muslim investors. Coty is a global beauty company that makes and sells fragrances, color cosmetics, and skin and body care through a Prestige segment (licensed designer fragrances such as Gucci, Burberry, and Calvin Klein) and a Consumer Beauty segment (mass brands such as CoverGirl, Rimmel, and Sally Hansen). Selling cosmetics and fragrances is a permissible activity, so the business screen passes — but a large interest-bearing debt load pushes COTY into doubtful territory.
Current quantitative Sharia screen
Based on 10-Q figures for the period ended 2026-03-31; calculated 2026-07-15.
3,171.5 / 10,228.9
257.1 / 10,228.9
822.3 / 10,228.9
4.7 / 1,281.6
- Financial
- Pass
- Overall
- Incomplete
Debt/assets is 31.01%, liquidity/assets is 2.51%, receivables plus cash/assets is 8.04% and interest income/revenue is 0.37%; known financial ratios pass, but activity treatment remains incomplete.
- Financial
- Pass
- Overall
- Incomplete
Known debt, liquidity and receivables-plus-cash ratios pass the examined total-assets limits; fragrance and product activity remain unclassified.
- Financial
- Pass
- Overall
- Incomplete
Known financial ratios pass the examined limits; this is not an official SAC classification and product activity remains incomplete.
- Financial
- Not calculated
- Overall
- Incomplete
A licensed historical market-cap series is not stored and qualitative activity treatment remains incomplete.
Business-activity disclosure
Coty sells fragrances, color cosmetics, skincare and body care through Prestige and Consumer Beauty segments. Cosmetics are generally permissible at the activity level, while fragrance formulation, licensing, marketing and product presentation can be treated differently by scholars.
Limitation: The filing does not provide a reproducible prohibited-revenue numerator for alcohol-containing formulations, licensing, marketing or product-level activity.
Purification
Coty discloses $4.7 million of interest income, or 0.37% of quarterly revenue, but no scholar-approved fixed purification percentage is inferred.
Inputs, assumptions and primary sources
- Amounts are USD millions from Coty's March 31, 2026 Form 10-Q.
- Debt combines $2.1 million of short-term/current debt and $3,169.4 million of long-term debt, net; operating leases are excluded.
- Cash and cash equivalents are $257.1 million; no separate interest-bearing securities balance is identified.
- Trade receivables are $565.2 million and quarterly net revenue is $1,281.6 million.
- The filing reports $4.7 million of interest income for the quarter; fragrance, licensing and product-level revenue are not classified by a universal Sharia numerator.
This is a reproducible financial screen, not a fatwa. A failed total-assets screen can coexist with a pass under a market-cap methodology. ZakatInvest keeps the qualitative assessment separate so numerical thresholds do not erase material context.
Coty's March 31, 2026 Form 10-Q reports $10,228.9 million of assets and $3,171.5 million of short- and long-term debt, or 31.01% debt/assets. The known asset-based financial ratios pass, while fragrance formulation, licensing and product presentation remain qualitative. The filing reports $4.7 million of interest income, or 0.37% of quarterly revenue.
Sharia Screening Methodology
Islamic scholars use several criteria to screen stocks:
- Business activity screen: Is the company's primary business halal?
- Debt ratio: Total debt / market cap must be under 33%
- Interest income: Interest income / total revenue must be under 5%
- Haram revenue: Revenue from haram sources must be under 5%
- Receivables ratio: Total receivables / total assets must be under 49–70% (varies by board)
What Coty Does
Coty Inc. (headquartered in New York) operates two beauty segments:
- Prestige: Licensed designer fragrances and prestige cosmetics — Gucci, Burberry, Calvin Klein, and others.
- Consumer Beauty: Mass-market makeup and personal care — CoverGirl, Rimmel, Sally Hansen, and others.
Selling cosmetics and fragrances is a permissible activity, so the business screen passes. The concern is leverage.
Why It Raises Sharia Concerns
1. Large Interest-Bearing Debt (Deciding Screen)
Coty took on substantial debt in its 2016 acquisition of a large beauty portfolio. Despite steady deleveraging, it still carried roughly $4 billion of debt with net leverage above 3x at times. Its total-debt-to-market-cap ratio should be confirmed against the 33% threshold using the latest filings — the deciding screen it has historically failed.
2. Interest Income
Coty earns incidental interest income on cash. This should be checked against the 5% interest-income threshold and the corresponding portion of returns purified.
3. Receivables
As a consumer-products company, Coty carries receivables and inventory, so the receivables ratio should be confirmed against the board's threshold using the latest filings.
Current Quantitative Screen (March 31, 2026)
- Debt / assets: 31.01% — $3,171.5 million / $10,228.9 million
- Cash / assets: 2.51% — $257.1 million / $10,228.9 million
- Receivables + cash / assets: 8.04% — $822.3 million / $10,228.9 million
- Interest income / revenue: 0.37% — $4.7 million / $1,281.6 million
The known quantitative ratios pass the displayed asset-based limits, but COTY remains methodology-dependent because fragrance, licensing and product-level activity are not reduced to a universal Sharia numerator. Market-cap methods are not calculated.
What About Purification?
Investors who take the lenient view that COTY is merely doubtful rather than impermissible should apply purification for the interest exposure — donating the corresponding share of gains to charity. Stricter investors may prefer to avoid highly leveraged names entirely.
How to Read the Result
Coty's known financial ratios pass the displayed asset-based tests, but the overall result remains DOUBTFUL / METHODOLOGY-DEPENDENT because scholars may differ on fragrance formulation, licensing and branding. This is ZakatInvest's filing-based analysis, not an official outside-agency classification.
Bottom Line
Coty (COTY) remains doubtful / methodology-dependent. The cosmetics business is generally permissible and the known asset-based ratios pass, but fragrance, licensing and branding treatment is school-dependent. Re-screen after new filings and consult a qualified adviser.
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