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Shares of Tata Motors rose as much as 4.6% on Friday, amid hopes of a turnaround after the Indian auto maker raised its luxury car unit Jaguar Land Rover's (JLR) margin outlook and reported its fourth consecutive quarter of profit.

The shares pared some of the early gains and were last up 2.7%. The stock is among the top gainers on the blue-chip Nifty 50 and Nifty Auto indexes, which were up 0.7% and 1%, respectively as of 10:24 a.m. IST.

Easing supply-side issues that had hurt JLR's production and stabilising cost pressures that fuelled Tata's expenses in the domestic business will help the company's recovery, Motilal Oswal said.

Strong JLR sales are key to Tata's earnings as the British division accounts for two-thirds of its parent's revenue.

"(JLR's) revenue growth is likely to be driven by production ramp-up and the huge pending order book (168,000 units), particularly for high realisation and margin models," Nuvama Institutional Equities said in a note.

Tata Motors, India's largest carmaker by revenue, upgraded JLR's full-year earnings before interest and taxes (EBIT) margin forecast to around 8% from 6% on Thursday.

Nuvama and Motilal Oswal each rate the stock "buy."

With easing inflation and increased federal spending on infrastructure, Nuvama analysts expect domestic sales of its commercial vehicles to increase. Further, passenger vehicles will likely get a boost from the shift to electric models and marketing push, they said.

The automaker's stock has climbed over 68% this year, outpacing the Nifty Auto index's 27.7% climb.