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 Shares of Indian automaker Tata Motors Ltd rose as much as 8.15% to a seven-month high on Monday after its luxury car unit Jaguar Land Rover (JLR) reported strong fourth-quarter sales and forecast free cash flow of about $1 billion.

Tata Motors's shares were the top gainer on India's bluechip Nifty 50 index, which was up 0.33%, and pushed the auto index up 1.16%.

JLR, on Thursday, reported a 24% jump in its wholesale volumes, excluding from China, in the January-March quarter, while retail sales grew 30% as chip and other supply constraints eased. Tata Motors' global wholesales rose 8% in the quarter.

JLR's sales contribute nearly 60% of Tata Motors's revenue from operations and the British automaker's strong sales in the October-December quarter had lifted the group to its first profit in two years.

"The market is underestimating JLR's EBIT (earnings before interest and tax) margin potential from upcoming phase of wholesale volumes," Goldman Sachs said in a note.

The brokerage raised its recommendation on Tata Motors' stock to "buy" from "neutral" to factor in JLR's improving volume outlook, and raised its target price on the stock to 550 rupees.

The average rating of the 32 analysts covering the stock is "buy" and their median price target is 520 rupees, according to Refinitiv data.

Tata Motors's stock hit a high of 473.30 rupees on the day, before giving up some gains to trade up about 6% at 463.75 rupees in early afternoon trading.

"We remain confident of strong volume recovery and free cash flow generation in JLR, improving margins in the commercial vehicle business, and the ramp-up of electric vehicle volumes in the domestic passenger vehicles business," Axis Capital said.