Bank of America-Merrill Lynch upgrades Jet Airways and SpiceJet to 'buy' from 'underperform', saying improving industry trends such as signs of ticket price hikes and reduced capacity will improve profitability.
"This should see these carriers substantially lower their losses in FY13 and return to profit in FY14," Bank of America-Merrill writes in a report dated on Monday.
The investment bank has also increased its price target on Jet to 480 rupees from 210 rupees, while raising SpiceJet's to 42 rupees from 21 rupees.
The unexpected profits posted by Jet and SpiceJet last week have raised hopes for a turnaround in India's ailing airline industry after its carriers lost a combined $2 billion last year.
Jet Airways shares gain 0.8 percent to 377.30 rupees, while SpiceJet gains 2.7 percent to 32.60 rupees.