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    Tenneco Clean Air India Limited

    TENNIND
    Automobile and Auto Components·5 Dec 2025
    Management Summary

    Tenneco Clean Air India Limited delivered strong financial results for Q2 and H1 FY26, marked by robust revenue and PAT growth, and significant new order wins. The company is strategically expanding capacity and investing in advanced technologies, particularly in the Advanced Ride Technologies segment. While near-term EBITDA margins may be soft due to listing-related costs and market headwinds, management is confident in long-term recovery and growth driven by exports and regulatory changes.

    Highlights

    5

    • Value-added revenue for Q2 FY26 was INR 1,151.5 crores, a growth of 8.9% year-on-year, outperforming the served applicable market growth.

    • PAT for Q2 FY26 was INR 150.7 crores, up 9.9% year-on-year, with margins at 13.1%.

    • The company secured INR 9,840 crores in incremental lifetime bookings, including INR 1,760 crores in exports, enhancing revenue visibility for the next five to six years.

    • The Advanced Ride Technologies segment showed robust growth of 15.4% year-on-year in Q2 FY26, driven by increasing demand for dynamic suspension components.

    • Tenneco Clean Air India Limited remains debt-free and reported a negative cash conversion cycle of -22 days for H1 FY26, indicating strong capital efficiency.

    Concerns

    3

    • EBITDA margin is expected to be 'a bit soft' in the next couple of quarters due to new costs associated with being a public listed company and new leadership hires.

    • The Clean Air and Powertrain segment's 3% YoY growth in Q2 FY26 was impacted by a slowdown in commercial trucks and certain passenger vehicle segments, partly due to pull-ahead volumes in Q1.

    • Management noted general market headwinds, including a 5-year low in commercial truck demand and potential impacts from a new labor code announcement.

    What Changed1

    vs Q3 FY26

    Guidance items4 → 5 (+1)
    Key financials

    Metrics

    12

    Periods

    2

    Q2 FY26

    5
    • Value-added Revenue
      ₹1,151.5 Cr
      YoY+8.9%
    • EBITDA
      ₹216.8 Cr
      YoY+5.7%
    • EBITDA Margin
      18.8%
    • PAT
      ₹150.7 Cr
      YoY+9.9%
    • PAT Margin
      13.1%

    H1 FY26

    7
    • Value-added Revenue
      ₹2,318.1 Cr
      YoY+8.2%
    • EBITDA
      ₹445.7 Cr
      YoY+6.6%
    • EBITDA Margin
      19.2%
    • PAT
      ₹318.8 Cr
      YoY+10.9%
    • PAT Margin
      13.8%

    Segment breakdown

    • Clean Air and Powertrain Solutions₹570.2 Cr49.5%
    • Advanced Ride Technologies₹581.3 Cr50.5%
    Donut· Share of Revenue (Q2 FY26)

    Order Book

    high confidence

    Total Value

    ₹ 9,840 crores

    as of 2025-09-30

    quantified

    Inflow this qtr

    ₹ 9,840 crores

    Execution

    Lifetime revenue over five to seven years; product validation and production start expected in 1 to 1.5 years, with significant impact late FY26, FY27, FY28.

    Composition

    Mix2 client types
    • Exports17.9%
    • Domestic82.1%

    Share of order book by client type

    "The company secured significant lifetime bookings, driven by strategic wins in both Clean Air and Advanced Ride Technologies, with exports growing much faster from a low base and contributing to margin improvement."

    Source:
    Prepared remarks

    Capital allocation

    3
    high confidence
    CategoryHeadline
    Capex

    Capex disclosed

    entirely through internal accruals without debt

    Debt

    Debt disclosed

    Liquidity

    Liquidity disclosed

    Operating cash flow for H1FY26 was INR1,122 crores, sufficient to fund capex requirements from internal accruals.

    Guidance & targets

    5
    CategoryTargetPriority
    Profitability
    EBITDA Margin
    a bit soft, then come back to same levels
    		Medium
    Regulatory
    TREM 5 Legislation Implementation
    around 2027
    		Medium
    Market Share
    Overall Market Share
    grow market share
    		Low
    Exports
    Export Growth Rate
    much, much faster than domestic business
    		Medium
    Order Book
    New Technology Order Book Announcements
    make apparent through an order book announcement
    		Medium

    EBITDA Margin Recovery

    next couple of quarters
    Current18.8% (Q2 FY26)
    TargetRecovery from 'soft' levels

    Why it matters

    To assess if the company successfully absorbs new listing-related costs and returns to historical profitability levels as guided.

    We expect EBITDA to be a bit soft, but with increase in the revenue in the coming years, these additional costs will get absorbed as we progress and we come back to the same levels.

    How to verify

    key_financials.metrics[label='EBITDA Margin (Q2 FY26)']

    Risks & concerns

    3
    RiskSeverity

    EBITDA margin compression due to listing costs and new hires

    EBITDA margin is expected to be 'a bit soft' in the next couple of quarters due to costs related to running as a public company (management, compliance, legal IT, auditors) and new leadership hires, though these are expected to be absorbed by revenue growth long-term. — Management acknowledged

    medium

    General market slowdown in commercial vehicles and certain passenger vehicle segments

    Headwinds from a 5-year low in commercial truck demand, road infrastructure issues, and a slowdown in B, C, D segments of passenger vehicles are impacting overall market growth. — Management acknowledged

    medium

    Uncertainty regarding new labor code announcement

    A recent labor code announcement creates uncertainty, with most companies in India still trying to understand its implications, but it will affect all companies. — Management acknowledged

    low

    Q&A highlights

    8

    “it takes about a year, year and a half to kind of get the product validated, propagated, and into production. So, you would expect to see a lot of this start to come in late FY26, FY27, FY28, and so on.”

    Clarifies the long lead times for new export orders to translate into revenue and highlights the diverse product categories involved.

    asked by Ravi Gupta

    2 min read6 chapters

    Detailed Narrative

    01

    Strong Financial Performance in Q2 & H1 FY26

    Tenneco Clean Air India Limited reported robust financial results for Q2 and H1 FY26, with value-added revenue growing 8.9% and 8.2% year-over-year respectively. Q2 FY26 value-added revenue stood at INR 1,151.5 crores, with PAT at INR 150.7 crores, up 9.9% YoY. For H1 FY26, PAT reached INR 318.8 crores, growing 10.9% YoY, and PAT margins expanded by 34 bps. The company maintained a debt-free status and a negative cash conversion cycle of -22 days for H1 FY26, demonstrating strong capital efficiency.

    02

    Significant Order Book Wins and Export Strategy

    The company secured substantial incremental lifetime bookings of INR 9,840 crores as of September 30, 2025, including INR 1,760 crores from exports. These bookings are expected to materialize over the next five to seven years, with production starting late FY26, FY27, and FY28. Exports, currently 7-8% of total revenue, are projected to grow 'much, much faster' than domestic business, driven by both third-party OEMs seeking supply chain diversification and internal Tenneco Global requirements, leveraging India's labor arbitrage and technology equalization.

    03

    Strategic Capacity Expansion and Capital Efficiency

    Tenneco plans to invest further in capacity expansion, including new plants, to support its growth trajectory and order book visibility. H1 FY26 capex was INR 24.6 crores, fully funded through internal accruals. A significant portion of future capex will be technology-related, focusing on transitioning from conventional to semi-active suspension systems and advanced clean air solutions, with some equipment transfers from other Tenneco regions to India for cost efficiency.

    04

    Advanced Ride Technologies (ART) Driving Growth

    The Advanced Ride Technologies segment demonstrated strong performance, growing 15.4% YoY in Q2 FY26 to INR 581.3 crores. This growth is fueled by a 'massive disruption' in the Indian OEM market towards advanced suspension systems, driven by benchmarking against global competitors. The shift towards active/semi-active suspensions, especially for EVs, increases content per vehicle and offers higher margins due to fewer specialized suppliers and Tenneco's pre-validated technologies.

    05

    Near-Term Margin Softness and Long-Term Recovery

    While Q2 FY26 EBITDA margins were 18.8%, management expects them to be 'a bit soft' in the next couple of quarters. This is attributed to new costs associated with becoming a public listed company, including senior management hires, compliance, legal, IT, auditors, and consultants. However, these costs are expected to be absorbed by incremental revenue growth, leading to a recovery to previous margin levels in the long term.

    06

    Impact of Regulatory Changes and Market Dynamics

    The company anticipates a positive impact from the upcoming TREM 5 emission norms, expected around FY27, which will significantly boost sales revenue due to the requirement for advanced components like oxycats and particulate filters. While Q2 FY26 Clean Air and Powertrain segment growth was 3% YoY, slightly underperforming the market, this was partly due to a pull-ahead📎 of commercial truck volumes in Q1 ahead of AC cabin legislation. Management emphasized a long-term view, with overall H1 performance for the segment being satisfactory.

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