* Q1 net profit 5.14 bln rupee vs 1.5 bln rupee consensus

* Revenue falls 8 percent to 64.05 bln rupees

* Shares erase losses and rise as much as 3.9 pct (Adds details, share reaction)

Tata Motors Ltd (TAMO.BO), India's largest vehicle maker, reported a 58 percent rise in net profit, with a change in accounting policy and lower costs seeing it defy forecasts for a halving of profit and sending its shares up.

The owner of the luxury Jaguar and Land Rover brands and maker of the recently launched the Nano, the world's cheapest car, said forex losses were 55.4 million rupees ($1.15 million) in the June quarter, under an accounting policy introduced in the March quarter, compared with 1.62 billion rupees a year earlier.

The company, which will disclose consolidated earnings including those of Jaguar and Land Rover later, said its profit before tax in the year-ago quarter would have been higher by 1.76 billion rupees under the new accounting rule.

Tata Motors, which delivered its first Nano earlier this month, reported a standalone net profit of 5.14 billion rupees, up from 3.26 billion rupees a year ago.

The surprise rise in net profit helped the stock erase all losses and gain as much 3.9 percent in last minutes of trade. The shares, ended 0.4 percent up in a flat Mumbai market .BSESN.

The company's continued focus on cost efficiencies, coupled with reduction of raw material prices, inventory reduction and improvement in sales realisation yielded considerable benefits, the firm said in a statement.

Total expenditure fell 10.7 percent to 59.17 billion rupees boosting operating margins to 11.4 percent from 7.1 percent in the previous year.

Revenue fell 8 percent to 64.05 billion rupees billion rupees from 69.28 billion year-ago.

A forecast by a Reuters poll of 14 brokerages had forecast net profit at 1.5 billion rupees on net sales of 61.76 billion rupees.

For the year to March 2009, the company had posted its first annual loss in eight years, hit by losses at its Jaguar and Land Rover unit. On a standalone basis the company had earlier reported a net profit. [ID:nBOM433658]

Auto demand was hit from mid-2008 by tight credit, high borrowing costs and a slowing economy. Aggressive interest rate cuts, government stimulus steps and easier financing have propped up demand for passenger cars since early 2009, but sales of commercial vehicles have yet to pick up.

Tata Motors' truck sales rose 8.8 percent in April from a year earlier but in May and June sales were down again. Car sales were down in the first two months of the quarter but rose an annual 11 percent in June on better financing availability.