Tenneco Clean Air India IPO: The good and the bad

Summary: Tenneco Clean Air India, a leading supplier of automotive parts, is set to go public on November 12, 2025. We provide a detailed analysis of its past track record, pros and cons to help you better decide whether the IPO is worth subscribing to.

Tenneco Clean Air India, an automotive component supplier, will open its IPO (initial public offering) on November 12, 2025 and close on November 14, 2025. The Rs 3,600 crore IPO will be completely an offer for sale (OFS).

Here, we breakdown the company’s business, financials, strengths, risks and valuation to help you make an informed investment decision.

What the company does

Tenneco Clean Air India, part of the US-based Tenneco Group, is a leading Tier-I automotive component supplier with a legacy in India dating back to 1979. The company designs and manufactures advanced clean air, powertrain and suspension solutions for major Indian and global OEMs (original equipment manufacturers). It dominates key segments, holding a 57 per cent market share in clean air solutions for commercial trucks, 68 per cent for off-highway vehicles, and 52 per cent in shock absorbers and struts for passenger vehicles.

As of June 2025, Tenneco Clean Air India operates 12 manufacturing facilities across seven states and one union territory.

Track record and valuation

When it comes to past financials, Tenneco Clean Air India appears to be on a modest ground. While its earnings before interest and tax (EBIT) and net income (PAT) saw double-digit growth during FY23-25, at 23.1 per cent and 20.4 per cent, respectively, revenue only surged by 0.7 per cent. Impressively, the company managed to significantly trim its debt, declining by 21 per cent during the same period.

At the upper end of the price band (Rs 397), Tenneco Clean Air India’s stock is expected to be valued at 28 times its TTM earnings and nearly 10 times its book value. In comparison, its peers trade at a P/E and P/B of almost 50 times and 8 times, respectively.

The good

Below are some of the key strengths of Tenneco Clean Air India.

#1 A leading player in the clean air solutions segment

Tenneco Clean Air India is a market leader in advanced clean air, powertrain, and suspension systems, serving top Indian and global automakers. Backed by strong engineering capabilities, it dominates key automotive segments, commanding 57 per cent market share in clean air solutions for commercial trucks, 68 per cent for off-highway vehicles and 52 per cent in shock absorbers and struts for passenger vehicles. It also ranks among the top four clean air solution suppliers for passenger cars, reflecting its strong competitive position and technical expertise.

#2 Consistent track record

Tenneco Clean Air India has demonstrated consistent growth and profitability, supported by disciplined capital use and improving margins. Its profit rose from Rs 381 crore in FY23 to Rs 553 crore in FY25, a CAGR of over 20 per cent, while EBITDA margins expanded sharply from 11.8 per cent in FY23 to 16.7 per cent in FY25. PAT margins also improved from 7.9 per cent to 11.3 per cent over the same period.

Additionally, an efficient working-capital management further strengthened performance, with the cash conversion cycle improving from negative 10 days in FY23 to negative 24 days in FY25, underscoring strong operational efficiency.

The bad

Despite having steady financials and enjoying a substantial market share, Tenneco Clean Air India comes with its fair share of risks.

#1 Revenue is largely concentrated among two sectors

Tenneco Clean Air India generates over 80 per cent of its revenue from the passenger vehicle (PV) and commercial vehicle (CV) segments in India. Its strong dependence on domestic OEM demand in these sectors means that any slowdown or cyclical downturn in the PV or CV markets could materially affect its business performance, profitability and financial stability

#2 Dependency on a handful of customers

Tenneco Clean Air India’s business is concentrated among a few large clients, with its top 10 customers contributing 78-84 per cent of revenue across FY23 to Q1 FY26. Such dependence poses a key business risk, as losing even one major client could significantly affect its numbers.

#3 Import-related risks

The company sources a notable portion of its raw materials from overseas, with imports accounting for 16-30 per cent of total raw material costs over FY23 to Q1 FY26. This reliance exposes Tenneco Clean Air India to global supply chain disruptions and geopolitical risks as any policy changes or strained relations with supplier nations could impact production schedules, project execution and business performance.

Where will the IPO proceeds go?

Since the IPO is entirely an offer for sale, Tenneco Clean Air India will not receive any proceeds from the issue.

So, should you subscribe to the Tenneco Clean Air India IPO?

Tenneco Clean Air India may rank among India’s leading auto component makers, but wealth isn’t built by chasing every IPO that comes along. It’s built through patience, discipline, and investing in businesses that grow consistently over time.

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