Shares of Hero MotoCorp Ltd, the country's largest motorcycle maker, fell 3 per cent on Tuesday, their biggest intra-day per cent loss in over two months.
Slowing growth of passenger vehicle sales hurt the company's profit, which missed the consensus for March-quarter profit on Friday.
Two-wheeler demand has weakened post the new insurance norms in September and the cost push from regulatory changes over the next one year will be a further drag for the company, according to CLSA.
The Indian auto industry body said earlier this month, passenger vehicle sales are expected to grow between 3 and 5 per cent in the current FY, after expanding at the slowest pace in five years last year.
CLSA also sees margin headwinds for all two-wheeler makers due to new safety and emission norms, amid weak demand and high competition.
The company's shares have fallen about 16 per cent YTD, as of Friday's close. The stock ended at Rs 2,512.65, down Rs 91.50 (-3.51%) on the BSE.