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    Tenneco Clean Air India Q1 FY27 earnings call

    TENNIND
    Automobile and Auto Components·6 Aug 2026
    Management Summary

    Tenneco Clean Air India Limited reported a strong Q1 FY27 with revenue from operations growing 20.2% YoY to INR15,448 million and VAR up 18.4% to INR13,816 million. EBITDA increased 7.9% to INR2,469 million, yielding a 17.9% margin on VAR, though margins faced pressure from commodity inflation and public company costs. The company achieved significant market share gains and secured new program wins, particularly in Advanced Ride Technologies, while maintaining a debt-free status and planning INR350-450 crores in capex for FY27.

    Highlights

    5

    • Revenue from operations increased 20.2% year-over-year to INR15,448 million, outperforming the served addressable market.

    • Value Added Revenue (VAR) grew 18.4% year-on-year to INR13,816 million, demonstrating strong underlying business performance.

    • EBITDA grew 7.9% year-on-year to INR2,469 million, achieving a healthy 17.9% margin on VAR despite external headwinds.

    • Significant market share gains across core businesses, including commercial vehicle Clean Air Solutions (57% to 58%) and passenger vehicle shock absorbers and struts (52% to 55%).

    • Secured a strategic spark plug order from a large Indian passenger vehicle OEM, opening a new white space opportunity.

    Concerns

    3

    • EBITDA margin was impacted by significant commodity inflation, rupee depreciation, geopolitical supply chain disruptions, and incremental costs of operating as a listed public company.

    • Clean Air business growth of 9.6% was below the overall industry growth (mid to high teens) due to the subtraction of EV market share and non-presence in a leading Japanese OEM.

    • Exports currently constitute only 7% of overall revenue, facing challenges from US tariffs on exhaust parts and macroeconomic conditions in Europe and Americas.

    Key financials

    Single quarter

    06 metrics
    1. 01Revenue from Operations15,448 Mn+20.2%YoY
    2. 02Value Added Revenue (VAR)13,816 Mn+18.4%YoY
    3. 03EBITDA2,469 Mn+7.9%YoY
    4. 04EBITDA Margin (on VAR)17.9%
    5. 05Profit After Tax (PAT)1,652 Mn

    Segment breakdown

    • Clean Air and Powertrain Solutions6,626 Mn48.0%
    • Advanced Ride Technologies (ART)7,190 Mn52.0%
    Donut· Share of VAR

    Capital allocation

    3
    high confidence
    CategoryHeadline
    Capex

    ₹350 crores

    new plan — Indicative plan, subject to economic environment and demand requirements. · entirely through internal accruals

    Debt

    Debt disclosed

    Liquidity

    Liquidity disclosed

    Generates a lot of cash, 50% to 60% of EBITDA converts to cash.

    Guidance & targets

    3
    CategoryTargetPriority
    Capex
    FY27 Capex Plan
    ₹350-450 crores
    		Medium
    Content per Vehicle
    Content per vehicle increase from BS-VI to BS-VII/CAFE 3
    1.3x to 1.5x
    		Low
    Product Launches
    New product launch intensity
    Very heavy
    		High

    What to watch in Q2 FY27

    5

    H1 FY27 Order Book Disclosure

    End of Q2 FY27
    CurrentOrder book not disclosed quarterly
    TargetQuantified H1 FY27 order book

    Why it matters

    Provides crucial visibility into future revenue and growth trajectory, especially for new program wins and export momentum.

    So, H1 at the end of the second quarter, we'll report order book, and then again at the end of the full year we'll report second order book. So, if you can just be patient for a few more months, you'll have the H1 numbers as well.

    Risks & concerns

    6
    RiskSeverity

    Commodity Inflation

    Significant commodity inflation, particularly in non-indexed items like rubber, plastics, crude oil, LPG, and CNG, impacted EBITDA margins. — Management acknowledged

    high

    Geopolitical Disruptions

    Geopolitical disruptions, specifically the Middle East war, contributed to increased costs for crude oil, LPG, CNG, plastics, and rubber. — Management acknowledged

    medium

    Costs of Operating as a Public Company

    Additional costs associated with operating as a newly listed public company, including setting up a full leadership team and governance, contributed to the year-over-year margin delta. — Management acknowledged

    medium

    Rupee Depreciation

    Rupee depreciation was cited as a factor impacting overall margins. — Management acknowledged

    medium

    US Tariffs on Exports

    Trump administration's tariffs on Section 232, affecting exhaust parts exports, make the environment tough for exports. — Management acknowledged

    medium

    Macroeconomic Conditions in Europe and Americas

    Macroeconomic conditions in Europe and Americas could pose a challenge for export growth. — Management acknowledged

    medium

    Q&A highlights

    8

    “But that year-over-year delta that you see, mainly comes to these two. It's moving from a private to a public company. And secondly, the commodity escalation that happened in the last quarter because of the Middle East war.”

    Management attributed the YoY margin compression to new public company operating costs and commodity inflation from geopolitical events, rather than core operational issues.

    asked by Ravi Gupta

    3 min read7 chapters

    Detailed Narrative

    01

    Q1 FY27 Financial Performance Overview

    Tenneco Clean Air India Limited commenced FY27 with robust financial results, reporting a 20.2% year-over-year increase in revenue from operations to INR15,448 million. Value Added Revenue (VAR) also saw significant growth of 18.4% year-on-year, reaching INR13,816 million. EBITDA grew 7.9% to INR2,469 million, resulting in an EBITDA margin of 17.9% on VAR. Profit After Tax (PAT) stood at INR1,652 million, representing a 12% margin on VAR, with PAT growth aligning with EBITDA growth when excluding a one-time📎 benefit from the prior year.

    02

    Market Share Expansion and Technology Leadership

    The company demonstrated continuous progress in gaining market share across its core businesses. Commercial vehicle Clean Air Solutions increased its value market share from 57% to 58% in FY2026, while passenger vehicle shock absorbers and struts expanded their market share from 52% to 55% in the Indian market. Furthermore, Tenneco maintained its strong leadership position in off-highway Clean Air Solutions with a 68% market share, reflecting its technology leadership and strong customer relationships.

    03

    Advanced Ride Technologies (ART) Driving Growth

    The Advanced Ride Technologies (ART) business continued its strong momentum, delivering a VAR of INR7,190 million, marking a 27.9% year-on-year growth. This growth is fueled by the increasing adoption of advanced suspension technologies and new customer additions. The introduction of DCx32, the latest addition to the proprietary DCx DaVinci platform, is specifically targeting smaller A and B segment vehicles, significantly expanding the addressable market opportunity for the company.

    04

    Strategic Program Wins and Export Initiatives

    Tenneco secured multiple new application wins, including a significant spark plug order from one of India's largest passenger vehicle OEMs, which represents a strategic entry into a new white space. The ART business also secured its maiden order from a leading European all-terrain vehicle manufacturer, opening new customer segments and geographies. Additionally, the Powertrain business won a heat shield order from Tenneco America, showcasing the global competitiveness of its Indian operations and supporting export ambitions.

    05

    Margin Pressures and Cost Management

    Despite healthy growth, EBITDA margins were impacted by several external and internal factors. These included significant commodity inflation, rupee depreciation, geopolitical supply chain disruption🌐s, and incremental costs associated with operating as a newly listed public company. Management is actively addressing these challenges through disciplined execution, productivity initiatives, rigorous cost management, and commercial actions, including efforts to recover non-indexed commodity costs from customers.

    06

    Capital Allocation and Future Growth Strategy

    The company remains debt-free and plans a capital expenditure of INR350-450 crores for FY27, which will be entirely funded through internal accruals. This capex is intended to support double-digit top-line growth and includes investments for two new plants, totaling INR140 crores. With strong cash generation (50-60% EBITDA conversion), Tenneco is also exploring M&A and inorganic options to further drive sustainable long-term growth.

    07

    Outlook on Regulatory Changes and Product Launches

    Management anticipates that the content per vehicle increase from BS-VI to BS-VII/CAFE 3 will be in the range of 1.3x to 1.5x, a more moderate jump compared to the BS-IV to BS-VI transition. The company expects a 'very heavy' period for new product launches across all segments from early calendar year 2027 through 2029, driven by new technology and market share gains, which is expected to contribute significantly to future growth.

    This is an AI-generated summary of a publicly available earnings call transcript.