Global brokerage firm, Morgan Stanley has announced its decision to downgrade Tata Global Beverages stock from "equal weight" to "underweight".

Morgan Stanley said that it downgraded the shares due to high valuations and advised the investors to book profits following a recent hike in share prices. The brokerage listed poor earnings visibility, weak market positioning, lack of pricing power, lower return ratios and high valuations as main reasons for the downgrade.

"The TGBL stock now trades at 22 times FY 14 estimated earnings. Although we view the management change and the JV with Starbucks as incrementally positive, we expect the contribution to earnings to be limited", wrote Nillai Shah, Girish Achhipalia and Sanath Sudarsan of Morgan Stanley Research in a report released on 19 November, 2012.

The brokerage has assigned a price of Rs. 140 to the TGBL stock, which is as much as 20 per cent below the Friday's closing price of Rs. 173.45. Following the release of the report, the shares of the company fell 4.66 per cent in the morning trade on Monday and touched a low of Rs. 165.35.

TGBL stock has increased to twice its value in the year so far and has outperformed the benchmark Sensex by 80 per cent.