TENNIND

Tenneco Clean Air India Limited achieved its 'best ever year' in FY26, demonstrating resilient, diversified, and execution-led performance. The company doubled its value-added revenue growth rate compared to the prior three years, recorded its highest ever EBITDA margin at 18.8%, and achieved its best ever ROCE of 94%. This strong performance was supported by robust order booking, a healthy balance sheet, and zero debt, reflecting the success of its operating model.

In Q4 FY26, the company delivered strong results across all key metrics despite elevated geopolitical cost pressures. Value added revenues grew 17.5% year-over-year to ₹1,405.8 crores. EBITDA increased 17.6% to ₹257.3 crores, maintaining an EBITDA margin of 18.3%. Profit after tax (PAT) also saw significant growth, rising 18.8% year-over-year to ₹166.8 crores, with a PAT margin of 11.9%.

Tenneco Clean Air India received the zero defect supplier award from Toyota, reinforcing its quality commitment. A key highlight was the strong validation of its DCx DaVinci mechanical suspension system, adopted by a leading Indian OEM for a flagship SUV platform, with further expansion planned. In the Clean Air and Powertrain business, the company secured a significant program and strategically entered the bearings systems segment with a leading Japanese passenger vehicle OEM, alongside a breakthrough win with another Japanese PV OEM for Clean Air products.

As of March 31, 2026, the company's lifetime order book stands at ₹12,400 crores, providing 100% visibility for its FY28 internal revenue target and underpinning a double-digit growth trajectory. To support this growth, Tenneco is investing approximately ₹140 crores in new greenfield plants: a Clean Air facility expansion in North India and an Advanced Ride Technologies plant in West India, ensuring readiness for future demand.

The company's highest ever EBITDA margin of 18.8% for FY26 (up 21 basis points from FY25) is attributed to its P3 operating model (People, Performance, Pride). This model drives operational discipline, improved cost absorption, and timely commercial actions. The standardized and modular approach allows for high capacity utilization and efficient resource deployment, contributing to sustained profitability even in volatile environments.

Exports are identified as a key growth vector, with the export order book growing significantly, particularly for Clean Air and Powertrain. Management views the depreciation of the Indian Rupee as a 'boon' for exports, making products more competitive in global markets (Europe, US, Asia). This enhances the company's ability to lower selling prices and win business from global OEMs.

Upcoming regulatory changes, specifically CAFE 3 and BS7, are expected to significantly expand the addressable market. CAFE 3 alone is projected to create an additional addressable market of ₹300-400 crores, while BS7 adds another ₹1,000 crores, totaling ₹1,300-1,400 crores over the next three to five years. These norms drive increased content per vehicle, especially for petrol engines requiring Gasoline Particulate Filters due to direct injection.

FY26 was a standout year for capital efficiency, with Return on Capital Employed (ROCE) improving to 94% from 57% in FY25. Fixed assets turnover increased to 9.6 times from 8.4 times. The company maintains a strong balance sheet, being debt-free with a net debt-to-equity of negative 0.4, and generated cash flow equivalent to 58% of EBITDA, providing ample financial flexibility for future investments.