Tata Motors rallies to record high on brokerage upgrades

Tata Motors shares surged over 3 per cent in early trade on Wednesday on the back of multiple upgrades by global brokerages. The stock was the top gainer on the 50-share Nifty benchmark.

At 09.30 a.m., the stock traded 3 per cent higher at Rs 323.85 on the BSE against a 1 per cent gain in the BSE Auto index. Credit Suisse and CLSA have upgraded Tata Motors, which was the biggest blue chip gainer in 2012.

Tata Motors' domestic sales have been sluggish, but analysts are upbeat about sales outlook of its U.K. based subsidiary Jaguar Land Rover. On Monday, JLR said it had a positive outlook for 2013 in sharp contrast with gloomier 2013 outlooks for other major European car markets.

Credit Suisse has upgraded the stock to "outperform" from "underweight" and raised its target price on the stock to Rs 390 from Rs 226 citing the likelihood of higher Range Rover volumes. The brokerage has increased its FY14-15 estimates on Tata Motors by over 25 per cent.

CLSA has upgraded Tata Motors from "buy" to "outperform" with a price target of Rs 385.

New product launches will boost Jaguar Land Rover's performance, CLSA said, adding that China slowdown fears are receding.

The brokerage upgraded its FY14-15 earnings per share by 5-8 per cent and said that Indian commercial vehicle cycle is likely to improve by FY15.

Tata's domestic car sales have been sluggish, but lowered expectations have been built into forecasts, analysts said.

Last week, Bank of America-Merrill Lynch upgraded Tata Motors to "buy" on expectations that Jaguar Land Rover would meet full-year sales expectations of 363,000 units and sustain momentum.