Top 6 picks by AHL Securities.

Unpacking AHL’s Top Stock Picks

This article provides a summary of the “alpha stocks” highlighted in Arif Habib Limited’s (AHL) comprehensive “Pakistan Investment Strategy 2026” report. The analysis focuses on companies poised for significant growth, driven by strategic initiatives ranging from transformative acquisitions to operational efficiencies and market expansion.

The goal is to offer a concise overview of the investment thesis for each selected company. This serves as a valuable resource for investors seeking insight into potential growth opportunities within the Pakistani market, based on AHL’s in-depth research and strategic outlook.

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Pakistan Telecommunication Co. Ltd (PTC)

Pakistan Telecommunication Co. Ltd (PTC) is a major player in the country’s telecommunications sector. The company is currently at a pivotal moment, undertaking a significant acquisition that is set to reshape the industry landscape.

The Investment Case PTC’s investment thesis hinges on its imminent transformation into a market co-leader. The acquisition of Telenor Pakistan is not merely an expansion but a strategic consolidation that effectively establishes a duopoly with Jazz. This move is poised to unlock significant shareholder value through operational synergies, enhanced pricing power, and a dominant infrastructure footprint ready for the 5G era.

Key Catalysts and Developments

• Strategic Acquisition: PTC is acquiring a 100% stake in Telenor Pakistan for PKR 108 billion, at an attractive enterprise value to EBITDA multiple of 2.25x.
• Creation of a Market Duopoly: The merged company will serve nearly 70 million users, capturing a 36% market share and placing it nearly on par with the market leader, Jazz (37%), fundamentally altering the competitive landscape.
• Infrastructure Expansion: The integration of Telenor’s 7,500 towers will increase PTC’s total tower footprint to approximately 22,000, significantly enhancing its network capacity and reach.
• 5G Readiness: The acquisition creates an entity with superior scale and spectrum depth, positioning it advantageously for Pakistan’s upcoming 5G spectrum auction. This will enhance operating efficiency and is crucial for capturing long-term growth aligned with the country’s digital ambitions.

Ghani ChemWorld Ltd. (GCWL)

Ghani ChemWorld Ltd. (GCWL) is a special purpose vehicle (SPV) established by the Ghani Group to house its calcium carbide manufacturing project. The company’s core business involves the production and sale of this key industrial chemical.

The Investment Case GCWL’s investment thesis is built on its unique position as Pakistan’s sole large-scale producer of calcium carbide, creating a powerful import substitution opportunity. Its strategic location within a Special Economic Zone (SEZ) provides significant financial advantages that enhance its project economics and competitive positioning in a market previously dependent on imports.

Key Catalysts and Developments

• SEZ Benefits: The plant’s location in the Hattar Special Economic Zone provides a 10-year income tax holiday and exemptions on duties for imported machinery, lowering capital expenditure and boosting profitability.
• Import Substitution: As the sole large-scale domestic producer, GCWL is positioned to displace imports. This provides a distinct pricing advantage by eliminating international freight costs, a benefit contingent on the effective management of potential product dumping from China.
• Operational Status: The company announced that its calcium carbide plant successfully entered the commercial production phase at the end of December 2025.

The Searle Company Limited (SEARL)

The Searle Company Limited (SEARL) is a prominent pharmaceutical company in Pakistan. It is currently executing a multi-faceted strategy focused on strengthening its financial base while expanding into high-growth therapeutic segments.

The Investment Case SEARL’s potential stems from a strategic pivot, fueled by a strengthened financial position. The divestment of a major asset has enabled significant debt reduction, providing the capital flexibility to aggressively pursue high-growth therapeutic areas like biosimilars and diabetes care. This transition from a legacy position to future-facing markets is the central pillar of its growth story.

Key Catalysts and Developments

• Deleveraging to Fund Growth: The divestment of its stake in Searle Pakistan (Private) Limited for PKR 10.5 billion allowed the company to reduce total debt from PKR 11 billion to PKR 7.5 billion.
• Margin Recovery: The deregulation of non-essential medicines, which account for approximately 80% of SEARL’s portfolio, supported margin expansion to 56% in the first quarter of FY26.
• Biosimilar Entry: SEARL received regulatory approval for Denosumab injections, Pakistan’s first locally manufactured biosimilar, targeting the high-value osteoporosis and oncology markets.
• Diabetes Market Entry: The company launched a generic tablet version of semaglutide, offering a more affordable alternative to Ozempic for Pakistan’s large diabetic population of approximately 34.5 million adults.

Shifa International Hospitals Limited (SHFA)

Shifa International Hospitals Limited (SHFA) is a leading healthcare provider that has transitioned out of a consolidation phase and re-entered a period of strategic expansion.

The Investment Case SHFA’s investment thesis is driven by a renewed expansion cycle focused on capacity additions and geographic diversification. This growth is supported by strong operating leverage, which is expected to fuel earnings momentum as the company capitalizes on high utilization and strengthens its presence in major urban centers.

Key Catalysts and Developments

• Geographic Expansion: Key projects include the Shifa National Hospital Faisalabad (SNHF), expected to commence operations by the fourth quarter of FY26, and the integration of Shifa Medical Centre Islamabad.
• Earnings Momentum: Management expects revenues to grow at approximately twice the prevailing inflation rate, supported by price adjustments and high utilization in key departments.
• Recalibrated Strategy: The company has shifted its medical tourism model to a leaner, referral-driven approach, successfully absorbing a decline in Afghan patient inflows while seeing a rise in patients from the UK and Europe.

National Refinery Limited (NRL)

National Refinery Limited (NRL) is Pakistan’s third-largest refinery and holds a unique position as the only one with a Lube Refinery, producing multiple grades of Lube Base Oils.

The Investment Case The core of NRL’s investment case is a significant and quantifiable valuation anomaly. A recent land revaluation has uncovered a value equivalent to PKR 577 per share, a figure that dwarfs its current market price and results in a deeply discounted Price-to-Book ratio. This hidden value, combined with a profitable monopoly in unregulated Lube Base Oils, presents a compelling opportunity to capitalize on a market mispricing.

Key Catalysts and Developments

• Land Revaluation: A revaluation of its land resulted in a PKR 46 billion surplus (PKR 577/share), which the source report notes is well above the last day closing price of PKR 413/share at the time of its analysis, implying a ~40% upside. This creates a low Price-to-Book ratio of 0.64 as of September 2025, indicating its stock market valuation is significantly lower than the value of the assets on its books.
• Strategic Lube Business: As the sole producer of Lube Base Oils, an unregulated product, NRL benefits from pricing power. Lube sales rose 28% year-over-year in FY25, helping to offset other financial pressures.
• Improved Product Mix: In the first five months of FY26, the throughput of its loss-making Furnace Oil (FO) product declined from 19% to 14%, while High-Speed Diesel (HSD) throughput increased.

Ittehad Chemicals Limited (ICL)

Ittehad Chemicals Limited (ICL) is one of Pakistan’s largest manufacturers of caustic soda and other chlor-alkali products, with an established heritage dating back to the 1960s.

The Investment Case ICL’s future profitability is strongly linked to a significant reduction in operating costs driven by its new biomass power plant. Since power comprises 35-40% of its cost of sales, this project is expected to drive meaningful margin expansion and earnings growth, which will be further supported by ongoing capacity expansions.

Key Catalysts and Developments

• Biomass Power Project: A 37.2MW biomass-fueled cogeneration plant is expected to be operational in FY26. This is projected to drastically reduce power costs and significantly improve operating margins.
• Earnings Impact: The new power plant is projected to lead to an earnings per share (EPS) improvement of PKR 15.6 per share. Based on this, AHL projects a target price of PKR 228/share.
• Capacity Expansion: The company is undertaking a ~25% increase in production capacity for caustic soda liquid and more than doubling its capacity for caustic flakes to meet growing demand.

Concluding Thoughts

The companies highlighted in AHL’s research present diverse and compelling investment narratives. These range from market consolidation and strategic acquisitions to significant cost optimization, niche market dominance, and entry into new high-growth sectors. Each case is underpinned by distinct catalysts expected to drive value creation.

This article serves as an informational summary of the research and analysis presented by AHL. Investors should view this overview as a starting point for conducting their own thorough due diligence before making any investment decisions.

⚠️ This post reflects the author’s personal opinion and is for informational purposes only. It does not constitute financial advice. Investing involves risk and should be done independently. Read full disclaimer →