Barclays remains cautious on India's two-wheeler makers, saying domestic demand has decelerated "significantly", while noting Honda Motor Co's (7267.T) "aggressive" capacity expansion plans could limit growth of its rivals.
"Given the increased competition, we forecast further market share loss for the incumbent players and believe the risk of increased price discounts or subvention schemes is high," Barclays said in a research note on Thursday.
Barclays downgrades Bajaj Auto Ltd to "equal weight" from "overweight" with a price target of 1,862 rupees.
The bank also maintained its "underweight" ratings on Hero MotoCorp Ltd and TVS Motor Co Ltd.
Barclays says Bajaj is better positioned than Hero and TVS as exports are expected to be 40 percent of its total volumes in FY14 and it has a strong product pipeline.
Bajaj Auto falls 0.6 percent, Hero MotoCorp is down 1.4 percent, while TVS Motor is up 0.8 percent.