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Feb. 3 (Bloomberg) -- South African construction stocks gained the most in more than three months after Morgan Stanley raised its recommendation on the country’s second-largest building and engineering company by market value.

The FTSE/JSE Africa Construction & Building Materials Index climbed 2.4 percent by the close in Johannesburg, its biggest increase since Oct. 29. The shares have still dropped 6.2 percent this year, compared with a 2.7 percent slide in the broader FTSE/JSE Africa All Share Index.

Morgan Stanley yesterday raised its recommendation on Murray & Roberts Holdings Ltd. to “overweight” from “equalweight,” citing the company’s growth outlook and valuation.

The construction shares climbed as this year’s decline has “been overdone and after the Morgan Stanley report yesterday,” said Andrew Bryson, a derivatives trader at Nedbank Group Ltd.’s BoE Stockbrokers in Johannesburg.

Murray & Roberts climbed 5.2 percent to 43.32 rand, its biggest gain since Sept. 11. The stock trades at 6.3 times earnings, according to Bloomberg data.

Aveng Ltd., which vies with Murray to be the country’s biggest construction company by sales, increased 2.8 percent to 37 rand and trades at 7.4 times estimated earnings. Group Five Ltd. climbed 3.2 percent to 32.60 rand and Wilson Bayly Holmes- Ovcon Ltd. advanced 2.9 percent to 101.50 rand.

The stocks had “fallen to levels where the price-to- earnings ratios are beginning to look juicy,” said David Shapiro, who heads Sasfin Holdings Ltd.’s securities unit in Johannesburg.

--Editors: Ana Monteiro, Antony Sguazzin.