TENNIND - Tenneco Clean

📊 NSE: TENNIND 🏢 Auto Components & Equipments 📅 Last Updated: 11/13/2025 15:25

💰 Financial Performance

Revenue Growth by Segment

Value Added Revenue (VAR) grew 8.9% YoY in Q2 FY26 to INR 1,151.5 Cr and 8.2% YoY in H1 FY26 to INR 2,318.1 Cr, outperforming sub-markets (PV, CT, OH) which grew 4-5%. Reported Revenue from Operations grew 9.6% YoY in Q2 FY26 to INR 1,280.6 Cr.

Geographic Revenue Split

Primarily domestic focused with a nascent but fast-growing export segment. The incremental lifetime order book of INR 9,840 Cr includes INR 1,760 Cr (approx. 18%) specifically for exports.

Profitability Margins

EBITDA Margin (Basis VAR) was 18.8% in Q2 FY26 and 19.2% in H1 FY26. PAT Margin (Basis VAR) was 13.1% in Q2 FY26 and 13.8% in H1 FY26, expanding 34 bps YoY due to stable material costs and higher interest income.

EBITDA Margin

18.8% in Q2 FY26, a 5.7% YoY growth in absolute EBITDA to INR 216.8 Cr. Margins are expected to be 'soft' in the near term due to incremental public company compliance and management costs.

Capital Expenditure

H1 FY26 Capex stood at INR 24.6 Cr, aligned with the localization roadmap and planned investments across 12 manufacturing facilities.

Credit Rating & Borrowing

Not disclosed in available documents; however, the company operates with a negative working capital cycle and high ROCE (>70% in H1 FY26), indicating low debt dependency.

⚙️ Operational Drivers

Raw Materials

Substrates and precious metals (platinum, palladium, rhodium) used in clean air systems, which are treated as pass-through costs to customers.

Capacity Expansion

Currently operates 12 manufacturing facilities and 2 R&D centers. Management plans to double capacity over the next 3 to 5 years to meet growing demand.

Raw Material Costs

Substrate costs are excluded from VAR to reflect underlying performance. Precious metals are a pass-through; price increases raise 'Revenue from Operations' but do not impact absolute EBITDA profitability.

Manufacturing Efficiency

Localisation and product mix improvements (higher value clean air systems) drove a 34 bps expansion in PAT margins in H1 FY26.

📈 Strategic Growth

Expected Growth Rate

8.9%

Growth Strategy

Execution of a INR 9,840 Cr incremental lifetime order book over 5-6 years, leveraging TREM 5 regulation shifts in FY27, and expanding into untapped 'whitespace' with Japanese OEMs.

Products & Services

Clean Air solutions (oxycat, particulate filters) for commercial and off-highway vehicles; Advanced Ride Technologies (ART) including shock absorbers and struts for passenger vehicles.

Brand Portfolio

Tenneco, Tenneco Clean Air, Advanced Ride Technologies (ART).

New Products/Services

Oxycat and particulate filters for TREM 5 norms; advanced dynamic suspension components for the ART segment.

Market Expansion

Strategic entry into a leading Japanese passenger vehicle OEM (previously untapped whitespace) and increasing market share with Indian OEMs in the ART segment.

Market Share & Ranking

Leader in Clean Air for Off-Highway (68% share), Commercial Trucks (57% share), and Shock Absorbers/Struts for PV (52% share).

Strategic Alliances

2.5% royalty agreement with Tenneco Group provides access to thousands of global patents and R&D support.

🌍 External Factors

Industry Trends

Shift toward stricter emission norms (TREM 5), vehicle premiumization requiring advanced suspension, and increasing export traction for Indian-made auto components.

Competitive Landscape

Holds #1 or #2 market positions across all key segments; competes with global and domestic auto-ancillary players.

Competitive Moat

Durable moat through 52-68% market shares, access to thousands of proprietary patents via parentage, and a negative working capital cycle that is industry-best-in-class.

Macro Economic Sensitivity

Highly sensitive to the Indian automotive market (PV, CT, OH segments) which grew 4-5% in H1 FY26.

Consumer Behavior

Increasing demand for 'cleaner, safer, and smoother' vehicles is driving OEM adoption of advanced emission and suspension technologies.

⚖️ Regulatory & Governance

Industry Regulations

Emission standards (BS-VI, TREM 5) mandate the use of the company's Clean Air systems; safety standards drive demand for ART suspension products.

Environmental Compliance

TREM 5 emission norms (expected FY27) are a major regulatory driver that will increase the company's content per vehicle.

⚠️ Risk Analysis

Key Uncertainties

Timing of TREM 5 legislation implementation (FY27) and the ability to absorb public company compliance costs which may soften margins by 1-2% in the short term.