On Thursday, Tata Motors Ltd shares rallied 12 per cent, hitting a fresh three-year high at Rs 376.4 on the Bombay Stock Exchange (BSE). The stock has been trading at its highest level since April 2018. It surpassed its previous high of Rs 360.65 touched on June 15.

This came after brokerage Morgan Stanley upgraded Tata Motors to an overweight rating from equal-weight and raised its target price to Rs 448 from Rs 298 earlier.

“Tata Motors is seen more like a Jaguar Land Rover (JLR), global luxury play, but we believe the incremental upside surprise will come from its Indian business. We expect 2022/23 to be strong for Indian autos and Tata’s Indian business, and with its lean cost structure, refreshed model portfolio and high leverage,” the brokerage said.

Morgan Stanley said it believes Tata Motors will see the highest operating and financial leverage gains. Besides, market share gains in the Indian passenger vehicle (PV) and commercial vehicle (CV) businesses could also alter it from a global luxury play to a worldwide and India play. “In our bull case, Tata Motors reaches zero net debt by 2024, while India PV and CV multiples go close to peers, driving 84 per cent upside in the name,” the brokerage added.