CLSA upgrades Mahindra and Mahindra to "outperform" from "underperform" and raises its 12-month target price to Rs 770 from Rs 720.
The brokerage says share prices have trailed the Sensex by 15 per cent since October.
The slowdown in its tractor business has been "fully priced in", but not the potential upside from its sales of utility vehicles and light commercial vehicles, which are seeing "robust" demand.
The brokerage also raises its fiscal 2013 to 2014 EPS by 10 to 13 per cent.
Shares in M&M up 0.7 per cent to Rs 659.50.
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