Tenneco Clean Air India Ltd

Analyst Notes

[Analyst View] Aamara Capital, 21 Oct 2026

Where the six research files disagree, and what this report uses

Open questions

Business Deep-Dive

Sources: RHP dated 5 Nov 2025 (including the CRISIL industry report the company commissioned), Annual Report FY26, four earnings calls and decks, NSE announcements, company website. Tags: [Fact] stated in a cited primary document, [Est.] own calculation or inference, [Analyst View] our assessment.

Which entity this report covers

What the company does

Products, line by line

Twelve plants and two R&D centres [Fact]

• Nine of 12 plants sit on industrial-estate allotted or leased land; all but Chakan Sealings are leased (RHP risk factors 15 and 32). Plants run 24x6. Floor areas Not Available (searched RHP and website).
• Annual Report BRSR: 100% of manufacturing facilities certified under IATF 16949 / ISO 9001, ISO 14001, ISO 45001; ISO/IEC 17025 (R&D labs), ISO 27001 and TISAX also listed. Test cells are certified by John Deere and Skoda Auto VW India. Quality metrics (Q1 FY26): customer defect rate under 2 ppm, delivery above 99%, recordable incident rate under 0.25.

Capacity on four different bases (dates and definitions differ; not merged)

• Other RHP capacities FY25: spark plugs 51.0 mn (96% utilised, Bhiwadi); engine bearings 42.9 mn (80.8%); sealings: non-MLS 19.7 mn (64%), heat shields 1.2 mn (93%), MLS capacity about 2 mn (the business file's figure is imprecise); Chakan ART modular 2.76 mn (85%); Puducherry sintered 58.8 mn (99.7%). Management on 6 Aug 2026: CAPT utilisation "upward of 80%" (hot ends), ART "more than 90%".
• [Est.] Cold-end capacity is under-used (about 50%), which dilutes fixed-cost absorption in Chennai (cold ends 43% of FY25); hot-end, spark-plug and ART lines are near full, hence the new plants.

Expansion in progress [Fact]

Customers

• Named OEMs [Fact]: Ashok Leyland, Bajaj Auto, Cummins India, Daimler India Commercial Vehicles, Honda Motorcycle & Scooter India, Hyundai Motor India, John Deere India, Kirloskar Oil Engines, Mahindra & Mahindra, Maruti Suzuki, Renault Nissan, Royal Enfield, Skoda Auto Volkswagen India, Tata Motors, Toyota Kirloskar, VinFast, VE Commercial Vehicles; Isuzu, Albonair and Volvo Eicher appear in awards. Serves all top-7 PV OEMs and all top-5 CT OEMs (FY25 volume ranking); 119 customers in FY25; 427 production programmes awarded as of Jun 2025 (358 CAPT, 69 ART).
• Relationship tenure: top-5 customers 29, 28, 27, 18, 17 years; top-10 average 19 to 20 years. Programme life 3 to 7 years with successor awards typical; ARAI re-homologation makes switching costly. Customer names beyond this list are not disclosed (consent withheld): Not Available.
• White space: Clean Air is absent at one large Japanese-promoted PV OEM (CEO: "leading Japanese OEM ... we are not present at all"). [Est.] Most likely Maruti Suzuki, though it is a named customer for other products. Entry route is the CAFE-III gasoline particulate filter programme, engine launch about 2028-29. Bearings entry at a Japanese PV OEM (Q4 FY26); Toyota zero-defect award for ART.
• Awards FY26: Mahindra Innovation & Performance, DICV Technology & Innovation, ET Auto Tech Ride Performance of the Year 2026, Daimler Quality, Kirloskar NPD, Volvo Eicher, Isuzu, Albonair.

Technology, R&D and operating system

Where the moat is, and where it is borrowed [Analyst View]

Business-quality observations [Est.]

1. Two different businesses under one name: CAPT (ICE-dependent but regulation-protected, 57% / 68% share in trucks / off-highway) and ART (VAR +19.7% in FY26 and +27.9% in Q1 FY27 vs CAPT +5.5% / +9.6%; PV shock-absorber share 52% to 55%).
2. Asset-light returns: fixed-asset turnover 9.6x and ROCE 94% are unusually high, helped by a low capital base after the group restructuring and common-control accounting.
3. Royalty and network fees (about 15% of EBITDA) are a permanent transfer to the parent, while the parent can end the network agreement on 180 days' notice; the dependence is real, but the parent is also a 59.8% owner.
4. Concentration: top customer about 20% of VAR, top five about 62%, PV about 65%.
5. Not Available (searched RHP, Annual Report text, call transcripts, company website): supplier names for substrates and electronics, customer-level revenue, plant-level FY26 capacity, FY26 headcount.

Segment Analysis

The statutory accounts have one reporting segment. Management splits only VAR by division; division EBITDA and margins are "disclosed only at consolidated level" (calls of Dec 2025 and Aug 2026), so segment EBITDA is Not Available (searched RHP, Annual Report, four decks and transcripts).

Division split [Fact]

Quarterly VAR by division since FY26 [Fact]

Subsidiary view of the same split (Annual Report AOC-1, FY26, Rs mn) [Fact]

[Est.] The parent plus three Powertrain subsidiaries sum to the Rs 29,155 mn CAPT revenue; adding TAIPL gives Rs 54,040 mn, the consolidated revenue, so intra-group eliminations appear negligible in the figures as reported. Profit by segment is therefore best proxied by subsidiary PBT margins: TAIPL 13.2% of revenue, FMIPL 14.9%, FMSIL 7.4%, FMBIL 9.5% [Est.]. These do not include royalties allocated by the group, and the parent PBT is Not Available in the extracted notes.

End-market, geography and customer mix of FY26 VAR [Fact]

Growth drivers and pressure points

Financials: P&L

Accounting basis (read before using any history) [Fact]

• The group was formed by common-control share swaps on 25-26 Mar 2025: the company issued 189,515,480 shares at Rs 288.85 for TAIPL, FMIPL, FMSIL and FMBIL. Consolidated numbers are restated as pooling-of-interests from the earliest period (Ind AS 103 Appendix C), so FY23 to FY25 are pro-forma "as if combined" (Annual Report note 39; RHP p.148).
• FY23/FY24 EPS as printed in the RHP restated statements (7.58, 8.90) sit on pooled historic weighted share counts (502.92 mn and 467.92 mn: PAT 3,810.43 / 7.58 = 503 mn; 4,167.87 / 8.90 = 468 mn), not on 403.6 mn; Screener's older EPS (17.80, 19.46) imply about 214 mn shares. Only FY25 and FY26 EPS are on 403.6 mn shares. On a constant 403.6 mn basis FY23 and FY24 would be about 9.44 and 10.33 [Est.], so the printed series overstates FY24 to FY25 EPS growth (+54% printed vs PAT +33%).
• Motocare carve-out: on 24 Mar 2025 TAIPL sold its 20,664,039 shares of Motocare India Pvt Ltd to fellow subsidiary Federal-Mogul Motorparts India Ltd for Rs 8,293.51 mn, receivable over about 2 years at 12% p.a. The gain went to capital reserve (Rs 4,914.47 mn net of tax), not the P&L. Motocare was a customer (Rs 2,316 mn FY25 revenue, 4.7% of revenue, 5.29% of VAR) and is now a related party.
• FY26 includes a one-time Labour Codes charge of Rs 271.68 mn (exceptional; Rs 203 mn post-tax per the Q3 call), effective 21 Nov 2025.
• Management quotes margins on VAR; Screener's OPM is on revenue. Both are shown.

Annual P&L (Rs mn, consolidated, restated) [Fact]

Sources: RHP p.132-133 (FY23-FY25); Annual Report p.283 (FY26); VAR from RHP p.62 and the Jun 2026 call; EBITDA per Screener. PAT CAGR FY23-FY25 20.5% (RHP). FY26 PAT +9.3% and revenue +10.5% [Est.]. The EBITDA row does not equal revenue less the three itemised cost lines: the remaining gap of about Rs 173 to 561 mn a year is presumably purchases of stock-in-trade and inventory changes, which the research files do not itemise [Est.]. Finance cost in FY26 includes interest on factored receivables of Rs 238 mn.

Cost structure as % of revenue [Est.]

Eight quarters (Rs cr, Screener, consolidated) [Fact]

*Pre-swap share count. Sources: Screener consolidated page; Q1 FY27 results filing. Screener's Jun-26 sales of Rs 1,545 cr equal the exact Rs 15,447.53 mn below.

Company quarterly view (Rs mn, on VAR) [Fact]

Q2 FY26 EBITDA 2,168 and PAT 1,507 are derived by subtracting the other quarters from the 9M totals (6,682 / 4,376) [Est.]. The Q1 FY26 PAT included about Rs 187 mn (net of tax) of one-time interest income on the Motocare sale; ex that, PAT growth tracks EBITDA growth (+7.9%).

Q1 FY27 (quarter to 30 Jun 2026), exact [Fact]

• Headwinds named by the company: commodity inflation (Middle East conflict since end-Feb 2026), rupee depreciation, listed-company costs; substrate pass-through dilutes percentage margin. Management: PAT growth is "similar to EBITDA growth excluding the one-time benefit in the year-ago quarter from the Motocare sale and other one-off income".
• Q1 FY27 EPS Rs 4.09 vs a Yahoo estimate of Rs 3.90 (+4.9% surprise, thin coverage). Yahoo's Dec-25 quarter history (3.43 actual vs 15.5 estimate) is unreliable and ignored.
• TAIPL's Jun 2025 numbers were audited by "previous auditors" (unqualified), per the Q1 FY27 filing note 3.

One-time items and earnings quality [Est.]

Revenue growth decomposition. No inorganic contribution is reported (the four subsidiaries joined by common-control swap and are restated from the start). Volume versus price: management attributes growth to served-market volume (+10% in FY26, +13% in Q4, +16.2% in Q1 FY27) plus content wins; FY25's revenue decline was price and substrate-sourcing driven, with VAR up 2.6%. Discounts, rebates and credits were Rs 1,439 mn in FY25 (2.94% of revenue, up from 0.93% in FY23) [Fact].

Financials: Balance Sheet, Cash Flow & Ratios

Balance sheet (Rs mn, 31 March, consolidated) [Fact]

Sources: RHP p.130-131 (FY23-FY25, restated); Annual Report p.254 (FY26). FY25 payables are the Annual Report comparative (the RHP shows Rs 7,222.94 mn for the non-MSME line vs Rs 7,160.51 mn in the Annual Report, a Rs 62 mn regrouping). FY25 total assets include Rs 8,421.73 mn of non-current other financial assets, of which Rs 8,293.51 mn is the Motocare receivable; that is why FY25 assets balloon and why FY26 equity shrinks (Rs 10,366 mn of dividends).

Leverage, net cash and liquidity

Trade payables, related parties and ageing [Fact, Annual Report notes 13(a), 28(c)]

The three ageing buckets listed total Rs 8,880.21 mn; the remaining Rs 1,503.22 mn of payables (14.5%) sits in buckets not extracted in the research file [Est.].

Other related-party balances Mar 2026: advance received from parent Rs 194.23 mn; other receivables Rs 184.75 mn (Rs 8,313.02 mn at Mar 2025, almost all the Motocare receivable).

Cash flow vs PAT (Rs mn) [Fact]

Pre-IPO cash extraction [Fact / Est.]

• By recipient (Rs mn, FY26 vs FY25): Tenneco Mauritius Holdings 8,855.79 (3,298.14); Tenneco (Mauritius) 686.62 (255.71); Federal-Mogul Pty 371.86 (538.57); Federal-Mogul Investments B.V. 272.44; Tenneco LLC 179.14.
• FY24 to FY26 dividends plus capital return total about Rs 20,900 mn against cumulative PAT of Rs 15,743 mn [Est.]. No final dividend for FY26 (management cites capacity expansion, technology, localisation; AGM of 28 Aug 2026 had no dividend resolution). Yield today is 0%; no dividend commitment, with cash uses beyond capex described as "M&A, inorganic options".
• Equity bridge FY26 [Est.]: Rs 16,124 mn at Mar 2025 plus PAT 6,044 less dividends 10,366 = Rs 11,802 mn, against reported Rs 12,005 mn after other reserve movements.

Working-capital days and returns [Fact]

• My FY26 check [Est.]: receivable days 42.9, inventory days 35.2 (on COGS Rs 35,099 mn), payable days 108; ROE = 6,043.6 / average equity 14,064.5 = 43.0%; ROCE = EBIT 8,491 (PBT plus finance cost, so it includes other income of Rs 590 mn and is after the Rs 272 mn exceptional charge; the EBITDA-less-D&A EBIT of Rs 8,173 mn in Tab 5 is a different base) / average capital employed 15,006 = 56.6%. The three ROCE figures differ by definition: 94% is the company's, excluding cash and surplus; 60.8% is Screener TTM; 56.6% is our average-capital basis. Company-quoted: FY26 fixed-asset turnover 9.6x (8.4x FY25), ROCE 94% (57% FY25; excludes cash and surplus).
• The very high ROCE and ROE are flattered by (i) near-zero net fixed assets because Tenneco licenses IP (royalty 2.5% of revenue) rather than owning it, (ii) a 108 to 111 day payable cycle, with third-party suppliers about 87% of payables and Rs 1.94 bn already overdue, and (iii) VAR-based pass-through accounting [Est.].
• Interest coverage: EBIT of about Rs 8,173 mn against finance cost of Rs 335.73 mn gives about 24x [Est.]; the cost is mostly factoring and lease interest, not bank debt. Current ratio: Not Available (not extracted; searched the Annual Report ratio note).
• Capex: FY26 Rs 1,150 mn; the two announced plants are FY27 to FY28 spend. Maintenance vs growth split Not Available.

Customer concentration [Fact]

Equity dilution and share-count history [Fact]

• ESOP 2025: approved by EGM 27 Jun 2025; ratified and amended by postal ballot (results 4 May 2026: 93.11% / 93.18% in favour, about 6.9% against; extends grants to group-company employees). No options granted in FY26. On 21 Aug 2026 the NRC granted 200,453 options against a plan limit of 8,072,086 options (2.0% of equity [Est.]); exercise price and vesting Not Available (not extracted from the NSE filing). The grant is 0.05% of equity [Est.].
• Dividend per share FY26 Rs 25.68 (pre-listing); none since.

Key balance-sheet risks [Analyst View]

• Cash quality: FY26 CFO is flattered by an affiliate receivable; underlying conversion is about 99% of PAT or 58% of EBITDA after capex.
• Payables stretch: 111 days, with Rs 1.94 bn past due within a year and Rs 1.35 bn owed to related parties; any supplier tightening would reverse the negative cash cycle (10 days of cost of goods is roughly Rs 1.0 bn of cash [Est.]).
• Factoring and vendor financing: Rs 238 mn of interest on factored receivables in FY26; vendor bill financing Rs 283 mn.
• Contingent liabilities Rs 1,318 mn plus GST notice Rs 567 mn: together about 31% of FY26 PAT if all crystallised [Est.].
• Capital allocation: no dividend since listing, M&A "on the table" with none done in 79 NSE announcements to 9 Oct 2026.

Management, Promoters & Governance

Control chain and promoters [Fact]

Holdings today are estimated from the RHP and Yahoo's insider table because the Sep 2026 SEBI shareholding-pattern XBRL could not be opened. Promoter equity history: 777.7 mn shares from the 2019 demerger; NCLT-approved capital reductions (464.3 mn cancelled 2021; 99.3 mn at Rs 12 in Dec 2023); 189.5 mn issued at Rs 288.85 for the Mar 2025 swaps.

Shareholding trend (Screener, % of 403,604,309 shares) [Fact]

[Fact] Annual Report, 31 Mar 2026 category detail: promoters 301,841,085 (74.79%); mutual funds and insurers 36,309,412 (9.00%); AIFs 14,436,706 (3.58%); FPIs 36,095,399 (8.94%); non-institutions 14,921,707 (3.69%); 100% dematerialised; 263 holders own 97.8% of shares. Yahoo: institutions hold 26.46% (57 institutions); 6-month net institutional buying 37.55 mn shares.

Sell-down sequence [Fact / Est.]

• 12 Aug 2026 block. NSE volume was 58,478,202 shares (14.5% of equity; normal 1 to 2 mn) at a close of Rs 540.65. SBI Arbitrage Opportunities Fund acquired about 21.06 mn shares that day and shows about 24.66 mn (6.1%). DII holding rose 11.45% to 22.69% and FII 9.69% to 11.90%, so the block was largely absorbed by domestic mutual funds. A hedged arbitrage position is typically offset by short futures, so it is not directional conviction [Est.]. The stock then drifted from Rs 577 (21 Aug) to Rs 447.85 (21 Oct). Official bulk/block record, buyer list and exact price are Not Available; the filing mechanism (block, bulk, or secondary) was not found.
• Apollo behaves as a financial seller: about 40% of the company sold in 9.5 months while still holding 59.79% [Est.]. Further sell-downs are plausible and no lock-in remains.

Pre-IPO placees, 30 Oct 2025, Rs 397 (RHP p.155, 160) [Fact]

The RHP summary refers to 13 investors; the lines above show 11 names and 14 line items (360 ONE has four series), and the count is not reconciled. Mark-to-market at Rs 447.85 is +12.8%, about Rs 56 cr gain on Rs 440 cr [Est.]. They were past any 6-month lock-in by May 2026; holdings today are not disclosed in sources read.

Board [Fact, Annual Report p.89-90, 176-190; RHP p.345-348]

Eight directors at 31 Mar 2026: 3 independent (incl. 1 woman), 4 non-executive non-independent (Tenneco/Apollo), 1 executive. The chair is independent. The board met 18 times in FY26 (the attendance denominators below are 17; the difference is not reconciled in the sources). Independent directors were appointed 5 May 2025 for 3 years (to May 2028).

• All four promoter-side NEDs skipped the 27 Sep 2025 AGM. Non-independent directors receive no sitting fee or commission. Pre-listing board changes: Parkhi, Rao, Hemade and Rishi Verma resigned as directors on 15 May 2025 (Verma remains President India Operations).
• Committees (FY26): Audit (Brar chair, Gupta, Sial; 14 meetings; Sial attended 10 of 14, 2 of 3 members independent); NRC (Pant chair, Brar, Sial, replaced by Bowen from 30 May 2026); Stakeholders' Relationship (Brar, Gupta, Chandrasekharan; 165 complaints received, all resolved); Risk (Pant, Baijal, replaced by Falk / Chandrasekharan from 30 May 2026, Bowen); CSR (Gupta, Pant, Mahesh); IPO committee and Committee of Independent Directors (dissolved post-IPO); Committee of Directors (Authority and Oversight; formed 25 Mar 2026 with borrowing, property and bank-account powers; no meeting in FY26).
• AGM 28 Aug 2026 (8th): 7 items (accounts, two director re-appointments, secretarial auditor, CEO remuneration revision, Falk appointment); no dividend resolution. The Annual Report notes the CEO's WTD remuneration comes solely from the company, nothing from the holding company or subsidiaries (p.97).
• Assessment [Est.]: compliant in letter (one-third independent with an independent chair; audit committee 2 of 3 independent), but control sits with the Apollo/Tenneco executives, one of whom (Sial) sits on audit and NRC and attends irregularly. The independents are credible (ex-HUL CFO, ex-McKinsey, senior counsel); Brar also sits on Exide boards, no conflict disclosed.

Key management and senior management [Fact]

Subsidiaries and group structure [Fact, Annual Report AOC-1 p.98]

No associates or joint ventures. Standalone FY26: revenue Rs 22,885.20 mn; PAT Rs 12,028.39 mn including Rs 9,119.66 mn of "other income", which is dividends upstreamed from subsidiaries (Annual Report p.57). The holding company is Tenneco Mauritius Holdings (60.22% at 31 Mar 2026). All four subsidiaries were acquired on 26 Mar 2025 through common-control share swaps. Loss-making units: none among the four. Track record of acquisitions: none outside group.

Royalty, technology and other fees to the Tenneco / Apollo parent [Fact: RHP p.60-62, 67; Annual Report p.320, 328]

1. Licence Agreement with Tenneco Holdings LLC (effective 1 Apr 2024; non-exclusive; India and designated territories): Monroe, Champion and Tenneco trademarks and IP/know-how for suspension, bearings, clean air, ignition and sealings. Royalty 2.50% of gross revenue of each licensee (the company and subsidiaries), 2.00% for FMBIL, excluding intra-group sales. The licensor cannot terminate before 1 Jan 2031 except (a) immediately if the licensees stop being affiliates, or (b) 30 days after an uncured material breach or liquidation. TAIPL's Monroe licence ends immediately if TAIPL ceases to be an affiliate of Federal-Mogul Motorparts LLC. Use of the "Tenneco" name depends on this agreement.
2. Master Affiliate Intangible Property and Network Services Agreement (30 Aug 2025, effective 1 Apr 2025, one-year auto-renewal) with Tenneco Automotive Operating Company LLC, Federal-Mogul Powertrain LLC and Federal-Mogul Ignition LLC: P3 operating system IP plus IT, finance, legal, ESG, HR, purchasing, M&A and quality services; fee an arm's-length percentage of net sales, capped at 0.5% of net sales; terminable by either side on 180 days' notice for any reason; 90-day wind-down of use; Michigan law; India only.
3. Management says the royalty is "2.5% of overall revenue, reduced by inter-company sales" (Aug 2026), benchmarked by an independent third party and approved by the independent directors. CFO (Dec 2025): "fairly middle of the fairway, MNCs pay 5-6%; impact on margin little to nothing". It is charged on revenue, not VAR, so precious-metal price rises raise the royalty without raising the margin base (CFO: immaterial).

FY23 and FY24 management-support and service-fee splits: Not Available (not extracted from the RHP restated notes). Sources: RHP p.61 (royalty FY23 to Q1 FY26); Annual Report note 28 p.328 (FY26 and FY25).

Other related-party transactions (Rs mn, FY26 vs FY25; Annual Report note 28 p.325-332) [Fact]

• Totals [Est.]: sales to affiliates about Rs 3.4 bn (about 6.3% of revenue); related-party purchases about Rs 2.5 bn (about 7% of COGS). No long-term purchase agreements; purchase orders only (RHP p.60).
• FM Ignition LLC (US group company) is a "crucial supplier" of spark plugs and insulators to FMIPL; the value is Not Available (the Annual Report shows only a Rs 60.1 mn sale to FM Ignition LLC).
• The Gurugram corporate office is leased from a Tenneco group entity (RHP p.60); the rent amount is Not Available. Audit Committee approves RPTs with omnibus approval; "no materially significant RPT with potential conflict" (Annual Report p.173, management statement).

Auditors and compliance [Fact]

Litigation and regulatory actions [Fact]

Governance timeline [Fact]

IPO, anchors and notable holders [Fact]

Supply Chain

Value-chain map

Where pricing power sits [Analyst View]: with the OEMs on price (annual price-downs; discounts, rebates and credits were 2.94% of FY25 revenue vs 0.93% in FY23) and with the regulator on content (BS-VI roughly doubled content per vehicle). Steel moves back to back with the OEM contract after a quarter's lag; non-indexed inputs (rubber, plastics, LPG/CNG/crude for furnaces, argon, freight, FX) are recovered only by negotiation. Substrates are pass-through at cost plus a handling fee, so precious-metal swings change reported revenue and working capital but not VAR (the OEM bears the risk). Tenneco's leverage is technology (group IP, DCx), homologation lock-in and 17 to 29 year relationships; the group's leverage over Tenneco is the licence.

Upstream: what Tenneco depends on [Fact unless tagged; RHP p.311-313, Annual Report]

Import dependence and localisation

Management localisation estimate "about 89-90%" (Jun 2026). Import countries: Germany, Spain, USA, Macedonia, Belgium, China, France, Japan, Korea, Mexico. Substrate imports vary, which is why the share including substrates swings.

Supplier concentration (two bases, not reconciled)

The RHP also states a dependence on a single supplier for pressed parts, electrodes and bimetal strips. The Annual Report's dual-sourcing claim is management's and conflicts with the RHP for those named components (not reconciled) [Fact].

Group-sourced inputs [Fact, Annual Report p.327-328; RHP p.375]

Utilities, labour and logistics

Downstream: who depends on Tenneco [Fact]

Exports

• Exports reached 17 to 22 countries over FY23 to Q1 FY26, including Argentina, Brazil, China, Czech Republic, Poland, Germany, Belgium, Indonesia, Thailand, Japan, Turkey, South Korea, Mexico, South Africa, UK, USA and Vietnam. US sales were 1.58% of FY25 revenue.
• Drivers cited by management: technology equalisation (BS 6.2 = Euro 6), China-plus-one, labour arbitrage, rupee weakness (a 15 to 20% export-competitiveness gain); critical mass "around 2028". US tariffs on Indian goods rose to 50% in Aug 2025 (US is 1.6 to 2.2% of revenue); management said (Feb 2026) these fell to 18% and that EU duties on bearings fall from 3-8% to zero under the India-EU FTA (company claim, independent confirmation Not Available); Section 232 duties on exhaust parts remain a "downer" (Aug 2026).
• New export wins: Euro VII proof of concept with a European truck OEM (Q4 FY26), maiden order from a European ATV maker, heat-shield order from Tenneco America (Q1 FY27). [Analyst View] With 70% of the export order book inside the group, exports are partly a transfer of group production, not yet independent market share.

Order-to-cash

Competitive Position

Industry structure

• Indian auto components are sold mainly OEM-direct on multi-year, platform-by-platform awards (3 to 7 years); ARAI homologation makes mid-programme supplier changes unlikely; OEMs prefer single sourcing for critical parts. The aftermarket is counter-cyclical and brand/channel driven.
• CRISIL expects the auto-component industry to grow 9 to 11% CAGR FY25 to FY30P. The ceramic substrate and catalyst are excluded from CRISIL's clean-air market size (Tenneco only cans and packages them).
• Commercial-truck industry has cycled three times in two decades with 20 to 25% peak-to-trough swings (RHP p.265).

Market size and growth by product (CRISIL, Rs mn) [Fact, RHP p.242-255]

[Est.] Implied cross-check: 52% x Rs 27,407 mn is about Rs 14.3 bn of PV-OE shock-absorber revenue (FY25) against ART VAR of Rs 20.8 bn (which also includes CV, aftermarket and exports). Tenneco's own FY26 VAR growth was +12.3% vs served-market volume +10% (FY26) and +13% (Q4); Q1 FY27 VAR +18.4% vs served market +16.2% (Q4 deck p.9; Q1 deck p.6).

Market share [Fact]

Management says the shock-absorber gain came from DCx DaVinci wins, and that Clean Air lost no share but grew slower than the market because of mix, EV-heavy European OEM sales, and absence at the largest Japanese-promoted PV OEM. A 19% PV clean-air share plus zero presence at one large OEM caps PV clean-air share until the CAFE-III GPF programme starts (about 2028-29).

Competitors by business line (named by the company / CRISIL) [Fact, RHP p.320, 245-256]

IPO peer table (RHP, FY25; prices as of 20 Oct 2025) [Fact]

Peer-average P/E 48.34x (range 9.7x to 75.9x); average peer market cap / revenue 5.13x vs TCAIL 3.3x. On RHP data Tenneco's FY25 EBITDA margin on revenue was 16.67% vs a peer average of 16.51%, PAT margin 11.31% vs 11.15%, ROE 42.65% vs 22.2%, ROCE 56.78% vs 27.5%, cash conversion cycle -24 days vs +28.8 days, net debt / EBITDA -0.33x vs -0.45x (RHP p.283).

Current peer snapshot, 21 Oct 2026 (Screener; Rs cr; March year-end) [Fact]

Screener OPM is on revenue; Tenneco's 17% is Rs 9,255 mn / Rs 54,040 mn (17.1%), and its VAR-based 18.8% is not comparable. SKF's FY26 numbers are post-demerger and no longer an auto peer. Screener Tenneco ROCE and ROE differ from the company's 94% ROCE definition. EV/EBITDA for peers is Not Available (not computed from the sources). [Est.] Tenneco's 29.1x P/E is about 39% below the average (47.9x) of the eight RHP peers' current multiples (Gabriel 70.0, Sharda 14.1, Sona 66.1, ZF 47.4, Bosch 55.5, SKF 30.2, Timken 49.4, UNO 50.4); among the eight, only Sharda (a smaller, single-product exhaust maker) is cheaper; in the wider table the small caps Talbros (19.1x), Bimetal (21.3x) and the sister Federal-Mogul Goetze (13.8x) are also cheaper. Not Available: SM Auto, Cummins Emission Solutions, Forvia-Anand JV, Niterra India, Denso India, Daido, Taiho, ElringKlinger, Purem metrics (unlisted or foreign; searched RHP and Screener).

Strengths and weaknesses vs the field [Est., from the tables above]

Competitive assessment [Est.]

• Moat: group IP (5,000+ patents), full-system capability (hot and cold end, mounted with substrates), modular lines, 17 to 29 year OEM relationships, CAFE / BS-VII readiness, and the DCx mechanical damper that OEMs say is hard to copy (3 to 4 years of co-development).
• Threats: Sharda-Purem and SM Auto-Eberspaecher can offer similar European technology; Forvia-Anand and Cummins CES are credible in CV; Gabriel, ZF and UNO Minda can launch FDD-class dampers; OEM in-sourcing of design; price-downs (discounts, rebates and credits Rs 1,439 mn in FY25, 2.94% of revenue, up from 0.93% in FY23; RHP p.85).

Porter's Five Forces [Analyst View]

Emission norms and fuel-economy rules [Fact, RHP p.239-242; calls]

Domestic auto cycle [Fact]

• CRISIL: PV FY25 4.3 mn (+2.5%), FY25-30P CAGR 4 to 6% to 5.3 to 5.7 mn; UVs 66% of PV in Q1 FY26 (small-car share fell from 46.9% in FY19 to 28% in FY24); FY25 powertrain mix: petrol 58%, diesel 18%, CNG 19.4%, EV 2.7%, strong hybrid 2.2%; EV 4.1% and hybrid 2.7% of Q1 FY26 retail; EV penetration 4 to 5% in FY26E; PV exports +6 to 8% CAGR to FY30 (RHP p.205-214).

• Drivers: GST 2.0 affordability, low base, financing, festive demand. SIAM expects growth to moderate in H2 on a higher base. [Est.] Read-across: a strong H1 FY27 volume tailwind, but small cars, where GST relief helped most, are where Tenneco's Clean Air content is thinnest; ART benefits (management: A/B-segment volumes lifted ART utilisation above 90%).
• Cost environment: the Middle East conflict since end-Feb 2026 lifted crude, LPG/CNG, plastics, rubber and freight; the rupee is weak (management: a 15 to 20% export-competitiveness gain); steel is indexed, others recovered with a lag. Trade: see Tab 8 (US tariffs and the India-EU FTA claim).

Risks & Red Flags

Severity is our judgement [Analyst View]; evidence is [Fact] unless tagged. Rows 1 to 22 follow the market file's register; rows 23 to 41 add items from the business, financial, governance and narrative files.

Other noted: precious-metal price swings affect reported revenue and working capital but not VAR (the OEM bears the risk); IT / cyber (SAP; TISAX at some plants only); insurance adequacy; the stock trades 31.8% below its high and 12.8% above the issue price [Est.].

Red-flag checklist

Concall Highlights & Guidance

Four earnings calls since listing: 5 Dec 2025 (Q2 FY26), 16 Feb 2026 (Q3 FY26), 3 Jun 2026 (Q4 FY26) and 6 Aug 2026 (Q1 FY27). Q2 FY27 results and the H1 order-book update have not been filed as of 21 Oct 2026. Transcripts and decks are on BSE (Tab 14). [Fact] unless tagged.

Guidance vs actuals: walk-the-talk ledger [Fact; verdict is our reading, Est.]

What analysts asked (sentiment themes) [Fact]

The four IPO book-runners (JM Financial, Citi, Axis Capital, HSBC) all remain on the calls, so research from them is IPO-linked [Est.]. Individual broker ratings and targets are Not Available (behind login).

Tone and contradictions [Analyst View]

• Tone over time: confident (Dec 2025), confident with capex news (Feb 2026), upbeat record-year framing (Jun 2026), defending margin (Aug 2026).
• "Margins stable" (Jun) vs 17.9% (Aug); "growth in line with market" for Clean Air (Dec) vs +9.6% against +16.2%; exports "now 7-8%" (Dec) vs 5.9% of VAR for FY26; order-book export share described three ways; "dual sourced" suppliers (Annual Report) vs single-sourced named components (RHP).
• Recurring themes: ART capacity, DCx wins, CAFE-III / BS-VII content, exports as a 2028 story, M&A optionality, cash returns undefined.

Timeline of the story [Fact]

Recent news, Aug to Oct 2026, grouped [Fact]

• Results: Q1 FY27 on 5 Aug (VAR +18.4%, PAT -1.7%); CEO on CNBC-TV18 on 7 Aug (company newsroom).
• Governance and board: AGM 28 Aug; CEO remuneration revised; Falk (Apollo) on board; Baijal exited in May; internal auditor KPMG; ESOP grant 21 Aug.
• Tax: GST SCN of 29 Sep 2026 (received 5 Oct) for FY2022-23 under s.73(1) Maharashtra GST Act, Rs 567.0 mn.
• Ownership: promoter 74.79% (Jun) to 59.79% (Sep); FII 9.69% to 11.90%; DII 11.45% to 22.69%; public 4.09% to 5.61%; holders 138,042 to 146,843. Documentation of the 12 Aug sale Not Available.
• Investor outreach: UBS conference, JPM Auto Tour, Nuvama CEO Forum; earlier March roadshows and a plant tour at Gurugram. Trading window closed late September (Q2 results due about Nov).
• Industry: SIAM Q2 FY27 PV +30.7%, CV +28.7%, CV exports +72.5% (15 Oct); ET Auto Tech "Ride Performance of 2026" award to Tenneco.
• Share price: down about 24% from end-June (Rs 592) to Rs 448 despite strong industry volumes [Est.].

Not Available: content of investor meets (27 Aug, Dec to Mar roadshows; no transcripts); broker research and media interviews (CNBC-TV18, ET Now, NDTV Profit videos not text-accessible); FY28 revenue target value; order-book split by segment; value of the spark-plug and bearing awards.

Growth, Outlook & Valuation

Order book and revenue visibility [Fact]

• Definition: orders confirmed by the OEM for price and volume, not yet in production; 5 to 6 year revenue visibility. Not audited and not itemised.
• [Est.] Rs 12,400 cr is about 2.5x FY26 VAR (Rs 4,918 cr), spread over roughly 5 to 7 years of programme life, i.e. a rough steady-state annual contribution of Rs 1,800 to 2,500 cr on today's base. It is not additive to FY26 revenue on a single-year basis. The company's own claim is "100% of FY28 target revenue" and double-digit CAGR FY25 to FY28 (against FY23 to FY25 VAR CAGR of 5.9%).
• Named programme values: DCx flagship SUV about Rs 2,200 mn a year; in-line BS-VI CV aftertreatment about Rs 1,150 mn a year. The spark-plug order (large PV OEM) and the Japanese-OEM bearings / hot-end values are Not Available.
• Pipeline themes: CAFE-III GPFs (from 2027), BS-VII (date open), TREM-V, hybrids and CNG cold ends, DCx on 3 to 4 OEMs plus A/B segments, exports (Euro VII PoC, ATV, Tenneco America heat shields). Book-to-bill: Not Available (revenue visibility disclosed as lifetime orders, not annual bookings).
• Next disclosure with Q2 FY27 results, promised to include the domestic / export split. Q2 FY27 results and the H1 order-book update are not filed as of 21 Oct 2026.

Management guidance and targets [Fact, management claims]

Expansion plans

Kharkhoda, Haryana (Clean Air; Rs 710 mn; about 130k cold-end and 256k hot-end units a year; SOP Q3 FY27) and West India (ART; Rs 690 mn; about 2.1 mn units a year; phased FY27 to FY28) are detailed in Tab 3. Combined announced capex Rs 1,400 mn; FY27 capex guide Rs 350 to 450 cr; capex-to-revenue 1:3 to 1:4.

Catalysts and drivers

IPO details [Fact unless noted]

Valuation at Rs 447.85 [Est. unless noted]

• A 3-year historical average cannot be computed: listed for 11 months (19 Nov 2025). Valuation is now about the IPO-price multiple: the stock is 12.8% above Rs 397, 8.8% below the listing close of Rs 490.80 and 31.8% below the all-time high of Rs 657 (6 May 2026).
• Dividend yield 0%; buyback none; the FY26 payout was entirely pre-listing (Rs 25.68 a share).

Illustrative scenario values [Analyst View, not a forecast]

The multiples are our choice, anchored on the IPO multiple (29x) and the peer discount; consensus EPS is thin (5 to 6 analysts) and set before the Q1 margin print, so the range is wide.

Street coverage (Yahoo Finance, 21 Oct 2026; secondary source, small sample) [Fact]

Price action and tape (NSE via Yahoo) [Fact; % Est.]

Month-end closes: Nov 2025 484, Dec 508, Jan 522, Feb 581, Mar 515, Apr 622, May 588, Jun 592, Jul 538, Aug 529, Sep 508. The IPO price of Rs 397 is below the chart axis.

Smart-money flows and sentiment [Fact / Est.]

• Institutional trend: DIIs 12.00% (Dec 2025) to 12.58% to 11.45% to 22.69% (Sep 2026); FIIs 8.41% to 11.90%; public 4.81% to 5.61%. The Sep-26 move reflects the 12 Aug block; the SBI Arbitrage Opportunities Fund hedged position (about 6.1%) is the largest identifiable outside holder (Tab 7).
• Anchors and pre-IPO placees are about 13% in profit on a Rs 397 entry; the 12 Aug block (about Rs 525-545) buyers are 15 to 20% under water [Est.]. The 50% anchor lock-in expiry on 16 Dec 2025 preceded the 18 Dec low [Est.].
• Media and social sentiment: news articles, brokerage-note summaries and forum threads Not Available (web search exhausted; Chittorgarh and Screener boards not retrievable). Proxies: the Street is 6 of 7 Buy with mean target +41%; the tape is 32% off its peak at the all-time-low zone with volume drying up; company messaging was "best-ever year, zero debt, highest EBITDA margin 18.8%" (Jun) then PAT -1.7% and VAR margin -175 bps (Aug).
• Bottom line: sell-side is positive and anchored on about Rs 630 to 650 targets set when the stock was Rs 550 to 620; domestic funds absorbed a 15% promoter sell-down and are now under water on it; the next catalysts are the Q2 FY27 results and any further Apollo sell-down [Analyst View].

Final Verdict

Base case (12 to 18 months) [Analyst View]

What supports the verdict, and what holds it back

Five things to remember

1. The IPO was a 100% offer for sale by Tenneco Mauritius Holdings (Apollo): 90.68 mn shares at Rs 397, Rs 3,600 cr, and the company received nothing. Apollo has since sold a further 15 points (74.79% to 59.79%) and holds 59.79%.
2. The parent takes 2.5% of gross revenue (2.0% for bearings) plus up to 0.5% in network fees: Rs 1,420 mn in FY26, 2.6% of revenue and about 15% of EBITDA [Est.]; the royalty licence runs to 1 Jan 2031, the network agreement can be ended on 180 days' notice, and the APA was filed then withdrawn.
3. FY26 operating cash flow of Rs 14.3 bn includes Rs 8.3 bn from an Apollo-group affiliate; ex that it is about 99% of PAT [Est.]. Related parties are 13% of trade payables, not 73%.
4. Q1 FY27 PAT Rs 165 cr (-1.7%) on revenue +20.2%; EBITDA margin on VAR 19.6% to 17.9% while management said stable. Half of FY26 VAR is the Monroe ART division, not clean air.
5. Q2 FY27 results and the H1 order-book update are not filed as of 21 Oct 2026; price Rs 447.85 and market cap about Rs 18,079 cr are third-party figures (Yahoo, Screener), not official NSE prints.

Five questions before investing

1. How was the 12 Aug 2026 sale executed, who bought the roughly 10 points beyond the SBI arbitrage position, and is another sell-down planned?
2. Does EBITDA margin on VAR hold at or above 18% in Q2 FY27, and what share of the margin loss is commodity timing rather than structural cost (listed-company costs, royalty base)?
3. What is the H1 order-book number, its domestic / export split, and the third-party share of exports given the 70% intra-Tenneco figure?
4. How will the transfer-pricing contingency (Rs 887 mn) and the withdrawn APA resolve, and could the 2.5% plus 0.5% fee stack be challenged or repriced?
5. Can Clean Air and Powertrain close the gap to its served market before the CAFE-III programme (about 2028-29), and is the Japanese OEM entry real revenue or a headline?

Sources

All sources accessed 21 Oct 2026 unless a date is shown. The six research files each carry their own source keys; the key tables are kept separate below (a key letter in one file need not mean the same thing in another), followed by one deduplicated list of full URLs. Web search was unavailable to the researchers, so broker notes, news articles and social content could not be read; those gaps are stated, not filled. Short names used in the text: RHP = Red Herring Prospectus (5 Nov 2025; Screener labels it "DRHP"); AR = Integrated Annual Report FY26.

Source key table of the business file (1_business)

Source key table of the market file (4_market)

Source key table of the narrative file (5_narrative)

Sources named inline in the financials, governance and "what is heard" files (2_financials, 3_governance, 6_heard)

Consolidated list of full URLs (deduplicated, by category)

Prospectus and annual report

Earnings-call transcripts and decks

NSE and BSE announcements and filings

Company and industry

Market data and databases (secondary)

Not Available (searched, not found)