"Indian tech is no longer a multiyear investment theme... TCS' scale and valuations should limit its share price," CLSA said in a note on Monday.
TCS shares closed 0.12 per cent lower at Rs 1,329.60 against a 0.33 per cent fall in the broader BSE IT index.
In October, CLSA had retained its "underperform" call on TCS post Q2 earnings announcement, but had raised the target price to Rs. 1,290 from Rs. 1,250.
TCS's net profit for the three months ended September rose to Rs 3,512 crore from Rs 2,439 crore a year earlier. Despite strong growth, most brokerages have been cautious on the counter because of high valuations.
TCS currently trades at nearly 21 times FY13 earnings. CLSA values the stock at 15-times FY14 PE, giving a target price of Rs 1,140.
CLSA added that any sign of turnaround in Infosys will impact TCS valuations. Over the last few quarters, analysts have been advising investors to replace Infosys with TCS in their portfolios because of prolonged underperformance in Infosys. Many analysts now believe that Infosys may have a hit a bottom and a turnaround is possible in the next few quarters might, especially if the global economy rebounds.
Here's what other key brokerages say in TCS (post Q2 earnings).
Goldman Sachs has an "equal weight" rating on TCS with a target price of Rs. 1,250.
Credit Suisse has an "outperform" call on the stock with a target price of Rs. 1,450.
Domestic brokerage major Kotak has a "reduce" call on the stock with a target of Rs. 1,225.