Jefferies upgrades Maruti Suzuki, shares surge

Raises the target price to Rs Rs 1,446 from Rs 1,398

Maruti Suzuki shares rise 3.9% after Jefferies upgrades the stock to "buy" from "hold" and raises its target price to Rs 1,446 from Rs 1,398.

Jefferies analysts Govindarajan Chellappa and Rajasa Kakulavarapu say Maruti Suzuki's "shift towards diesel has been best exploited by Maruti," adds auto maker to benefit from a combination of cyclical and secular trends, while competition is "waning."

Separately, Bank of America-Merrill Lynch says Maruti is its preferred pick in the auto sector and is the best proxy on a cyclical recovery in the sector, especially with a slew of new products.

However, both Jefferies and Merrill Lynch downgrade Tata Motors to "hold" and "neutral", respectively.

While Jefferies cites adverse risks to demand and a weakening product mix as Tata steps up investments, Merrill sees reduced visibility in commercial vehicle growth, among other factors.

Tata Motors shares up 1%.