Deutsche Bank initiated coverage of United Spirits with a "buy" rating, citing it 53 percent market share in the Indian spirits market, the significant entry barriers to foreign players, and the benefits from its deal to sell a majority stake to Diageo.

The investment bank said Diageo Plc would bring "much-needed financial prudence" to United Spirits Ltd, which should improve profitability and cash flows.

Deutsche set its 12-month price target at 2,700 rupees.

United Spirits shares were up 1.5 percent at 1,788 rupees as of 10:06 a.m.