Shares of auto giant Mahindra and Mahindra rose on Tuesday as Dalal Street investors appeared excited that global brokerage Nomura pointed to Mahindra Group Automotive’s potential in the electric vehicle (EV) space.

M&M shares were up 3.6% in intraday trade and were up 3.2% at Rs 1,266.35 in BSE trade at 2.25 pm after falling for four straight sessions. M&M stock has returned investors more than 52% so far this year.

The rally in M&M shares came after a recent report from Nomura Securities said that sport utility vehicles (SUVs) should be the most attractive part of the EV rollout.

The brokerage said that large SUVs are subject to 50% GST, compared with 5% for electric vehicles, and road taxes are also low or zero. Therefore, in its view, this should be the most attractive segment for launching electric vehicles.

Given the larger size, Nomura expects M&M’s e-XUV400 to feature a 40KWH battery and start at Rs 1.8 lakh, similar to the Nexon EV Max. The company may also consider a smaller battery size variant.

“Currently, Nexon EV sales are around 2,000-3,000 units per month (15-20% of total Nexon model sales). The e-XUV400 has the potential to reach 2,000-3,000 units per month,” the brokerage said.

Nomura said there is significant upside potential if M&M continues its attractive styling and function strategy and its value-for-money proposition.

“A successful launch can give the market confidence in MM’s ability to succeed in the EV segment, which can lead to further re-ratings,” it added. The brokerage has a buy rating on the stock at Rs 1,505, which implies a 23% upside from Monday’s BSE close of Rs 1,226.40.