Management

• Niranjan Kumar Gupta (Chairman and Independent Director),
• Arvind Chandrasekharan (Whole-Time Director and Chief Executive Officer),
• Manavendra Singh Sial (Non-Executive Director),
• Nathan Patrick Bowen (Non-Executive Director),
• Prakash Mahesh (Non-Executive Director),
• Utsav Baijal (Non-Executive Director),
• Jaidit Singh Brar (Independent Director),
• Roopali Singh (Company Secretary and Compliance Officer),
• Mahender Chhabra (Chief Financial Officer)

Use of Proceeds

The total issue size is Rs. 3600 cr which comprises entirely offer for sale of Rs.3600 cr.

Competitive Strengths

Market Leadership Driven by Deep OEM Integration and Product Stickiness Tenneco India holds dominant market positions across critical automotive component segments, underpinned by long-standing partnerships with top Indian and global OEMs. With leadership in Clean Air Solutions for commercial trucks (57%) and off-highway vehicles (68%), and a 52% share in passenger vehicle shock absorbers, the company’s strength lies in its deep integration into OEM product development cycles. Its technology-intensive, customized solutions undergo rigorous design validation and homologation, creating high entry barriers and strong customer stickiness. This trust-based collaboration ensures multi-year program continuity—427 active programs as of June 2025—and secures predictable, recurring revenue streams across platforms and geographies.

Strategically Diversified Portfolio with Resilient, Counter-Cyclical Revenue Streams Tenneco India’s breadth of proprietary, technology-intensive products—spanning Clean Air (catalytic converters, DPFs, mufflers), Powertrain (bearings, sealings, ignition) and Advanced Ride Technologies (shock absorbers, struts, semi-active systems)—creates a balanced revenue mix across vehicle segments and use-cases. In Fiscal 2025 VAR was split roughly 52:48 between Clean Air & Powertrain and Advanced Ride, while passenger vehicles, commercial vehicles, aftermarket and exports all contribute meaningfully. Aftermarket sales (via Motocare) and exports provide counter-cyclical cushions when OEM demand softens, and product modularization plus long multi-year programs enable cross-selling, faster localization and predictable, stable cash flows—strengthening margin resilience and growth optionality.

Innovation-Led Growth Leveraging Global R&D Synergies and Localization Excellence Tenneco India’s innovation engine is powered by its ability to integrate global R&D excellence with India-centric cost innovation. Backed by Tenneco Group’s 5,000+ active patents and 7,500+ trademarks, the company’s two India-based technical centers in Pune and Hosur enable end-to-end design, testing, and validation. By localizing advanced global technologies—such as Euro 6-compliant clean air systems and semi-active electronic suspension for EVs—Tenneco India delivers proprietary, modular, and cost-efficient products tailored to local needs. This cross-deployment of technology not only accelerates time-to-market but also strengthens customer partnerships and ensures leadership in next-generation mobility and emission-compliant solutions.

Flexible, Automated, and Localized Manufacturing Network Enabling Operational Excellence Tenneco India’s 12 strategically located, fully automated manufacturing facilities across key automotive hubs—Maharashtra, Tamil Nadu, NCR, and Gujarat—enable proximity to OEM customers and cost-efficient delivery. Equipped with advanced robotic welding, digital inspection, and IATF-certified quality systems, these plants ensure precision, scalability, and 99%+ on-time delivery with minimal defect rates (<2 ppm). Supported by a highly localized supply chain (over 86% domestic sourcing), SAP-driven planning, and lean practices under the global P3 Operating System and OSE frameworks, the company achieves superior productivity, supply reliability, and capital efficiency. This integrated manufacturing ecosystem underpins consistent quality, cost leadership, and rapid response to customer demand.

Peer Comparison

Key Risks & Concerns

Dependence on Tenneco Group for Licensed IP, Technology, and Brand Usage Tenneco India’s operations rely heavily on licenses and support from the Tenneco Group for proprietary technology, global brands (Monroe, Champion, Tenneco), and R&D collaboration. Any termination or unfavorable modification of the License or IP & Network Services Agreements could restrict access to these assets, disrupt production, and impact brand recognition. Additionally, higher royalty fees or regulatory scrutiny on related-party transactions may adversely affect profitability, margins, and overall business continuity.

High Revenue Concentration Among Top Customers Tenneco India’s business is significantly dependent on a concentrated customer base, with its top ten customers contributing over 80% of total revenue in Fiscal 2025. While these relationships are long-standing—averaging over 19 years—the absence of exclusivity agreements poses a risk. The loss, reduction, or delay of orders from any major customer could materially impact revenue, profitability, and cash flows, given the lengthy supplier qualification cycles and limited immediate diversification opportunities.

Absence of Firm Volume Commitments in Awarded Programs Tenneco India’s awarded programs, typically spanning three to seven years, lack binding purchase commitments from OEMs, relying instead on non-binding volume forecasts. Any delay, reduction, or cancellation of such programs—especially given the customized nature of components—could lead to underutilized capacity, unrecoverable development costs, and lost revenues. Since OEMs can modify or terminate contracts without compensation, this dependence on variable production volumes poses a material risk to profitability and cash flow stability.

Dependence on Government Emission Regulations and Policy Timelines Tenneco India’s Clean Air & Powertrain Solutions business is highly sensitive to changes and timelines in government emission standards. While stricter norms drive demand for advanced after-treatment systems, delays in implementation—such as the TREM V postponement—can defer revenue realization and capacity utilization. Conversely, accelerated or complex regulatory shifts increase R&D and compliance costs. Any misalignment between regulatory timelines and product readiness could materially affect growth, profitability, and cash flows.

Outlook and Valuation

Tenneco India is well-positioned to sustain strong growth momentum, driven by its alignment with structural industry shifts and tightening regulatory standards. The company’s Clean Air & Powertrain Solutions division stands to be a key beneficiary of the government’s push toward cleaner mobility through upcoming emission transitions such as BS7, TREM V, CAFE, and CPCB IV+. Having established deep technical expertise and long-standing OEM relationships, Tenneco India is strategically engaging with automakers early in the product lifecycle to develop modular, BS7- and CAFE-compliant after-treatment systems. Its proven track record during the BS6 transition—where it localized global technologies and scaled new manufacturing capabilities—provides a strong foundation for capturing rising content per vehicle (CPV) opportunities. Furthermore, by tailoring advanced global clean air solutions to India’s cost-sensitive market, the company is set to maintain its leadership in heavy-duty commercial and off-highway segments while expanding its passenger vehicle penetration. These regulatory tailwinds, coupled with India’s growing focus on sustainable mobility, ensure a sustained multi-year growth runway for its clean air business.

Simultaneously, Tenneco India is capitalizing on the structural shift toward premiumization, SUVs, EVs, and hybrids, which is redefining component sophistication and system value in the passenger vehicle market. Its Advanced Ride Technologies division is well placed to leverage this evolution with innovations such as continuously variable semi-active suspension, adaptive ride height systems, and next-generation valve technologies that deliver superior ride quality and lightweight efficiency. The company’s localization roadmap under the “Make in India” framework aims to manufacture advanced systems such as IROX bearings and ceramic spark plugs domestically, thereby lowering costs, mitigating supply chain risks, and enhancing margins. These initiatives not only strengthen competitiveness but also deepen wallet share with OEMs across both PV and CV categories. Meanwhile, its strategy to position India as a global export hub—backed by 12 automated, IATF-certified plants—will drive incremental growth by serving Tenneco Group companies and global OEMs across Europe, North America, and emerging markets. Supported by cost leadership, flexible manufacturing, and standardized quality systems, exports are expected to become a larger share of total value-added revenue (VAR) over the medium term.

Looking ahead, Tenneco India’s focus on operational excellence, cross-divisional synergies, and innovation-led product development will underpin sustainable margin expansion and cash generation. The integration of Clean Air & Powertrain and Advanced Ride Technologies under a unified management structure enables cross-selling across platforms and customers, leveraging shared procurement, common raw materials, and global process frameworks like P3 and OSE. Continued R&D investments in low-carbon technologies, hydrogen exhaust systems, and hybrid-ready components will ensure technology relevance amid evolving drivetrain shifts. Financially, its disciplined cost management—reflected in steady reductions in material costs (to 65.05% of revenue in FY25) and improved inventory days (to 32 days in Q1FY26)—combined with capital-efficient capacity expansion, supports robust free cash flow generation. With a diversified product portfolio, strong OEM partnerships, and increasing localization and export integration, Tenneco India is strategically positioned to deliver resilient growth, superior profitability, and leadership across India’s transition toward cleaner, premium, and globally integrated mobility systems. Tenneco Clean Air India is valued at 29x PE based on FY25 EPS. We recommend a SUBSCRIBE rating for the issue.