The market managed to overcome settlement crisis but fear of war between India and Pakistan continued to haunt the investors. The result was investors' interest was low and they preferred to follow wait and see policy. It was also felt that while there was pressure on the GoP 'to act' ,Indian claims were aired by the western electronic media promoting India's war hysteria. The departure of foreigners from India also led to creation of negative sentiments among the investors. All eyes are now set at the forthcoming visit of some foreign dignitaries. However, keeping the history in mind and the attitude of westerns one does not expect any attempt from India to de-escalate. It is exercising the maximum pressure on Pakistan to give up its claim and accept that Kashmir is an integral part of India. Indian officials have made their intentions clear by saying repeatedly that they would not allow another division of India on the basis of religion.

The GoP may be more than keen to privatize the company but one should not expect any enthusiasm from overseas investors. It has been stated earlier also that Pakistan had missed the boat. The country did not succeed in selling the company when the market was ripe. It is being offered at a time when most of the global investors are off loading their investment in telecommunication companies. The reason being that revenues in this sector are flat and indicate downward trend. The global macroeconomic slow down is only a secondary cause of this revenue deflation. It is feared that revenue issue will haunt global telecom companies particularly those highly dependent on land lines. However, some analysts hint that situation is not all that bleak for PTCL. Its revenue is mostly driven by greater penetration and its revenue growth has a lot of potential. Though, its monopoly status is expected to expire soon, it may take some time till an effective competitor emerges.

At a time when most of the outstanding issues were resolved, the scrip became victim of rumours. It did face some technical problems which were said to be rectified. However, lately a rumour that the company is paying penalty to WAPDA for not supplying the agreed quantum of electricity raised apprehensions. Reportedly, the company denies any shortfall in available capacity, but rumours spread faster than clarification. It may also be kept in mind that rumour mongers are often able to bring down price of the scrip and the recent play is part of their overall strategy to bring volatility to make extra money.

The company has started trial production from its expanded capacity, in line with its initial plan. The trial production is expected to continue till October this year. The management wishes to commence commercial production with the start of its new financial year. With the expanded capacity coming on line, the country may see a surplus of PSF. So far the local manufacturers have been able in determining PSF sale price in the local market. Some analysts fear that there may be some price war once there is an over supply. The other possibility is that the cartel prevails and each producer curtail production proportionately. However, both the scenario would serve as a negative for local PSF manufacturers. The potential treat is comparatively low for the company due to bulk of the production being utilized in-house.

The company is in the business of extraction, storage and distribution of industrial, specialty and medical gases. In addition, it is also involved in the business of medical and welding equipment. Therefore, its performance is largely dependent on performance of the economy. The performance of manufacturing sector after September 11, 2001 and tension at Indian border may depress the profitability of the company. Historically EPS of the company has remained stable and there is also a forecast for modest performance. The scrip offer attractive dividend yield but it is also illiquid.

The company is likely to come out of the red given the recent restructuring proposal which includes injection of funds. The company plans to raise Rs 6 billion by direct allotment of shares at par value to its sponsors, Fauji Fertilizer, Fauji Foundation and Jordan Phosphate Mines Company. The GoP has also agreed to inject another Rs 5 billion. Besides that the assumption and repayment of the company's foreign currency loan as an interest free loan would result in substantial savings. This arrangement would enable the company to wipe out its accumulated losses. Overall profitability of the company is expected to improve but dividend payment may not be possible for next couple of years. Currently, the scrip is selling below par and its price may improve after the execution of the above mentioned plans.