Share prices of India's largest automobile manufacturer Tata Motors rose sharply on Thursday, as the company is reportedly carrying out the production of a non-Nano car in full swing at Sanand plant in Gujarat.

Tata Motors shares touched an intra-day high of Rs 338.75, before paring some gains to trade at Rs 337.95, up 3.87%. Its shares have fallen by nearly 45% in the past six months.

The company is set to launch its first non-Nano small car by December this year, Business Standard reported.

"From the way things are at the moment, it seems the company will be able to meet the December rollout deadline," said a Tata Motors vendor.

Code named 'Kite', the new car is being built on a "completely new platform." Kite will be a hatchback powered by a 1,200-cc engine.

"It is seen giving a new lease of life to the Sanand plant, which has been struggling to maintain healthy capacity utilisation levels," the report said.

Tata Motors is also in the process of developing another new car based on Nano platform, code-named 'Pelican'. Pelican is reported to be ready for sale by next year, which will be a 900-1,000-cc hatchback.

Tata Motors reported nearly 49% drop in its net profit in the first quarter of current financial year (2015-16) due to declining sales in the world's biggest car market, China.

A slump in sales is largely led by slowing economic growth in its key market China and weakening consumer sentiments in India. China is the largest market for Tata Motors' subsidiary Jaguar Land Rover (JLR), accounting for 20% of its sales.

But many analysts are now turning bullish over the stock, taking into account cheap valuations and expected revenue growth from China.