Tata Motors' stock revs up to near 4-year high on Morgan Stanley upgrade

BENGALURU (Reuters) - Shares of India's Tata Motors surged to their highest levels in nearly four years on Thursday after Morgan Stanley Research upgraded the stock on expectations of encouraging annual earnings from the Jaguar Land Rover parent.

The brokerage increased its rating on Tata Motors to "overweight" from "equal-weight", which it had maintained since 2017, saying it expected the automaker's India business to post a full-year profit after eight years of losses.

Shares of Tata Motors surged as much as 14% to 383 rupees to become the top percentage gainer on India's blue-chip Nifty 50 index.

Morgan Stanley analysts also believe Tata Motors will see the highest operating and financial leverage gains among its peers, aided by its India business.

The automaker had said earlier that it aims to have near-zero automotive debt by fiscal 2024, which Morgan Stanley believes to be a bullish indicator for the company.

In July, Tata Motors warned of a short-term impact from semiconductor shortages, rising costs of raw materials and pandemic uncertainty.

However, Morgan Stanley said that these risks are now well understood by market participants and are likely factored into the share price.

 

(Reporting by Shivani Singh in Bengaluru; Editing by Ramakrishnan M.)