Tenneco Clean Air India Limited IPO

13 Nov 2025 , 09:51 AM

Tenneco Clean Air India Limited is a leading automotive components manufacturer. It is a part of the US-based Tenneco Group. The organisation develops and produces Clean Air and Powertrain Solutions and Advanced Ride Technologies for auto OEMs in both the passenger and commercial vehicle markets. Supported by global R&D and strong local manufacturing, it manufactures automobile parts that comply with BS-VI and Euro 6 standards. The company is a key beneficiary of India’s transition in the clean mobility space. Its IPO is entirely an Offer‑for‑Sale.

Offer details of the IPO

• Total Offer Size – The total size of the issue is INR 3,600 crore. It comprises an Offer for Sale of up to INR 3,600 crore, with no fresh issue component.
• The shares being sold are held by:
• Tenneco Mauritius Holdings Limited (Promoter) – up to INR 36,000 million

Price Band: INR 378 to INR 397 per Equity Share

Book Running Lead Managers (BRLMs)

• Axis Capital Limited
• JM Financial Limited
• Citigroup Global Markets India Private Limited
• HSBC Securities and Capital Markets (India) Private Limited

 

Indian Automotive Industry – Overview

The Indian auto industry is currently undergoing a significant transformation, with consumer tastes changing, stricter emission norms, and increasing fuel prices. Preferences are shifting from hatchbacks and sedans towards SUVs, UVs and MUVs. Meanwhile, India is emerging as a mature export hub for cost-effective and aesthetically appealing vehicles. Today, India is known for producing modern UVs as well as luxury cars in a few markets, including Latin America, Africa and Southeast Asia.

Table: Key Segments

Category	Description
Hatchbacks	These are smaller, fuel-efficient cars that were extremely popular. But their share of the market has slipped in recent years as consumer preferences for larger and more feature-laden models have grown.
Sedans	Midsize cars have risen slightly slower as the majority of new car buyers prefer Utility Vehicles. But luxury sedans retain a niche. These have appealed to export markets.
UVs – Utility Vehicles	This segment, which encompasses SUVs and MPVs, is the fastest-growing in the industry. SUVs with two rows of seating continue to be a favourite of both domestic consumers and global markets, because they offer more space, are more safety-oriented than other automotive categories and have higher prestige.
Vans	These are primarily for commercial and multi-use and constitute a smaller segment of the industry.

Source: RHP

 

This state of change is being driven by the country’s well-established manufacturing ecosystem, an adept pool of manpower and robust tie-ups with many top OEMs worldwide. Going forward, growth of the industry will largely depend on its competitive strength in exports, adaptation to newer technologies such as electrification and connected mobility and favourable government policies, namely the Production Linked Incentive (PLI) scheme.

 

Table: Industry Segment Growth Outlook (FY20–FY30)

Segment	FY20–FY25 CAGR	FY25–FY30P CAGR	Comment
Hatchbacks	(4.7)%	0–2%	Steady decline due to shifting consumer preference toward larger, safer vehicles. The market is now largely replacement-driven.
Sedans	(2.8)%	1–3%	Marginal recovery expected due to premium sedan exports (e.g., Hyundai Verna, VW Virtus), but domestic demand remains weak.
UVs	25.5%	6–8%	Dominant growth driver; market share projected to reach 71.3% by FY30. Strong export demand and urbanisation trends sustain momentum.
Vans	2.8%	1–2%	Stable but low-growth segment; primarily used in commercial fleets with limited consumer appeal.
Total PV Market	9.3%	4–6%	Overall, growth moderates post-FY25 as base effects ease, but UV-led expansion and exports ensure sustained industry momentum.

Source: RHP

Key Takeaways:

• Total passenger vehicle market is expected to decelerate in the next few years from around 9.3% CAGR (FY20-25) to 4-6% CAGR (FY25-30) post initial recovery from the impact of the pandemic.
• UVs to remain as the industry’s growth driver. Their share is expected to rise to around 71% by FY30, driven by robust export demand along with increasing urbanisation and consumers’ preference for safer and larger cars.
• Sedans could see a modest uptick, buoyed by the export success of premium models like the Hyundai Verna and VW Virtus, although domestic demand is unlikely to pick up much.
• Hatchbacks will continue to be under pressure and grow at an incremental pace as the largest section of car buyers shifts to more spacious, feature-laden cars. Most of the sales are expected to be to existing customers upgrading their autos.
• Vans will remain in the niche they find themselves today in the commercial/fleet market with minimal penetration at retail and slight opportunity for growth.

 

Tenneco Clean Air India Limited – Overview

Tenneco Clean Air India Limited (Earlier known as Federal-Mogul Goetze (India) Ltd) is a subsidiary of Tenneco Inc., USA and produces automotive components for both the domestic market as well export markets. The company was originally established as Federal-Mogul Goetze (India) Limited, a joint venture between the Indian Goetze group and Federal-Mogul Corporation (USA). In 2018, it was acquired by Tenneco and rebranded as Tenneco Clean Air India Private Limited.

 

Competitive Positioning

Tenneco derives its edge from high-margin products, operational discipline and access to global innovation. Local strategy and customer diversification will be essential drivers. With an unrelenting emphasis on innovation and efficiency, the company is well-placed to capitalise on India’s move towards cleaner mobility.

Strengths

1. Global Support and Technology Advantage: With support from the global Tenneco Group, it has access to leading-edge technologies in Clean Air, Powertrain and Ride Performance that help align its products with Euro 6 and BS-VI norms.
2. Healthy Financial Performance: Tenneco generated an EBITDA margin of 16.67%, a PAT margin of 11.31%, and an ROCE of 56.78% in FY2025, which are indicative of healthy profitability and capital efficiency compared with its industry peers.
3. Efficient operations: Negative Cash Conversion Cycle of -24 days, demonstrates strong working capital management and operational discipline.
4. Diversified, Skilled Workforce: Balanced revenue mix between Clean Air & Powertrain Solutions (57%) and Advanced Ride Technologies (43%), complemented by a skilled workforce with strong technical expertise.

Weaknesses

1. Leadership changes: In the run up to the IPO, the company had made significant leadership changes including changing the board composition, CEO, CFO and company secretary.
2. Revenue Volatility: Despite robust EBIT margins in FY2025, revenues suffered a decline of 10.56% YoY.
3. High Parent Dependency: High dependency on the parent for strategic decision making, could hamper long term competitiveness.

 

Financial Profile

Stable Revenue Performance: The company’s revenue from operations was marginally up from ₹48,273.68 million in FY 2023 to ₹48,904.30 million in FY 2025 at a compound annual growth rate (CAGR) of around 0.6% during the period. Value-Added Revenue (VAR) — excluding pass-through substrate charges- climbed from ₹39,020 million to ₹43,801 million at a CAGR of 5.95%. The headline revenue was likely affected by a decline in sales of traded products, and the operational performance was better.

Higher Profitability: Tenneco Clean Air India Limited’s profitability has improved significantly, with its EBITDA margin (on a revenue basis) improving from 11.82% during FY2023 to 16.67% during FY2025, and PAT Margin increasing from 7.89% to 11.31%. On VAR terms, EBITDA increased from 14.62% to 18.61% for the quarter, and Adjusted PAT margin expanded from 8.62% to 11.92%. ROCE and ROE rose from 33.51% to 56.78% and from 32.88% to 42.65%, respectively, indicating the superior capital utilisation and solid cost control.

 

Table: Peers Comparison

Name of the Company	Closing Price (₹ per share as on Oct 20, 2025)	Revenue from Operations for FY 2025 (₹ million)	EPS (Basic) (₹)	EPS (Diluted) (₹)	P/E Ratio
Tenneco Clean Air India Ltd	397.00	48,904.30	13.68	13.68	29.02*
Bosch Ltd	39,215.00	1,80,874.00	683.25	683.25	57.39
Timken India Ltd	2,927.70	31,478.10	59.48	59.48	49.22
SKF India Ltd	2,200.00	49,199.00	114.50	114.50	19.21
ZF Commercial Vehicle Control System India Ltd	13,036.00	38,309.63	242.90	242.90	53.67
Sharda Motor Industries Ltd	1,061.00	28,365.71	109.71	109.71	9.67
Gabriel India Ltd	1,294.50	40,633.81	17.05	17.05	75.92
Uno Minda Ltd	1,229.60	1,67,746.10	16.42	16.37	75.11
Sona BLW Precision Forgings Ltd	461.20	35,460.21	9.92	9.92	46.49

Source: RHP; * – based on upper end of price band

 

Table: KPI Comparison

Company	Particulars (Unit)	FY 2023	FY 2024	FY 2025	CAGR
Tenneco Clean Air India Ltd	Revenue from Operations (₹ million)	48,273.68	54,676.12	48,904.30	1%
	Revenue Growth (YoY %)	–	13.26%	(10.56)%	–
	EBITDA (₹ million)	5,706.34	6,120.85	8,152.39	19%
	EBITDA Growth (YoY %)	–	7.26%	33.19%	–
	EBITDA Margin (Basis VAR) (%)	14.62%	14.34%	18.61%	–
	EBITDA Margin (Basis Revenue) (%)	11.82%	11.19%	16.67%	–
	PAT (₹ million)	3,810.43	4,167.87	5,531.43	20%
	PAT Growth (YoY %)	–	9.38%	32.72%	–
	PAT Margin (Basis VAR) (%)	9.77%	9.76%	12.63%	–
	PAT Margin (Basis Revenue) (%)	7.89%	7.62%	11.31%	–
	Net Debt (₹ million)	(3,802.26)	(1,679.77)	(2,662.06)	–
Bosch Ltd	Revenue from Operations (₹ million)	1,49,293.00	1,67,271.00	1,80,874.00	10%
	Revenue Growth (YoY %)	–	12.04%	8.13%	–
	EBITDA (₹ million)	18,067.00	20,948.00	23,097.00	13%
	EBITDA Growth (YoY %)	–	15.95%	10.26%	–
	EBITDA Margin (Basis Revenue) (%)	12.10%	12.52%	12.77%	–
	PAT (₹ million)	14,255.00	24,913.00	20,130.00	19%
	PAT Growth (YoY %)	–	74.77%	(19.20)%	–
	PAT Margin (Basis Revenue) (%)	9.55%	14.89%	11.13%	–
Timken India Ltd	Revenue from Operations (₹ million)	28,066.10	29,095.41	31,478.10	6%
	Revenue Growth (YoY %)	–	3.67%	8.19%	–
	EBITDA (₹ million)	6,135.00	6,132.00	6,418.00	2%
	EBITDA Growth (YoY %)	–	(0.05)%	4.66%	–
	EBITDA Margin (Basis Revenue) (%)	21.86%	21.08%	20.39%	–
	PAT (₹ million)	3,907.45	3,921.42	4,473.86	7%
	PAT Growth (YoY %)	–	0.36%	14.09%	–
	PAT Margin (Basis Revenue) (%)	13.92%	13.48%	14.21%	–
SKF India Ltd	Revenue from Operations (₹ million)	43,049.20	45,701.30	49,199.00	7%
	Revenue Growth (YoY %)	–	6.16%	7.65%	–
	EBITDA (₹ million)	8,012.70	8,116.00	8,468.80	3%
	EBITDA Growth (YoY %)	–	1.29%	4.35%	–
	EBITDA Margin (Basis Revenue) (%)	18.61%	17.76%	17.21%	–
	Profit After Tax (PAT) (₹ million)	5,248.80	5,518.00	5,659.10	4%
	PAT Growth (YoY %)	–	5.13%	2.56%	–
	PAT Margin (Basis Revenue) (%)	12.19%	12.07%	11.50%	–
ZF Commercial Vehicle Control System India Ltd	Revenue from Operations (₹ million)	34,442.45	38,156.47	38,309.63	5%
	Revenue Growth (YoY %)	–	10.78%	0.40%	–
	EBITDA (₹ million)	5,370.00	6,610.00	7,390.00	17%
	EBITDA Growth (YoY %)	–	23.09%	11.80%	–
	EBITDA Margin (Basis Revenue) (%)	15.59%	17.32%	19.29%	–
	Profit After Tax (PAT) (₹ million)	3,176.71	4,064.47	4,607.30	20%
	PAT Growth (YoY %)	–	27.95%	13.36%	–
	PAT Margin (Basis Revenue) (%)	9.22%	10.65%	12.03%	–
Sharda Motor Industries Ltd	Revenue from Operations (₹ million)	26,999.36	28,092.62	28,365.71	2%
	Revenue Growth (YoY %)	–	4.05%	0.97%	–
	EBITDA (₹ million)	2,818.00	3,614.00	3,964.00	19%
	EBITDA Growth (YoY %)	–	28.25%	9.68%	–
	EBITDA Margin (Basis Revenue) (%)	10.44%	12.86%	13.97%	–
	Profit After Tax (PAT) (₹ million)	2,083.34	2,995.91	3,149.16	23%
	PAT Growth (YoY %)	–	43.80%	5.12%	–
	PAT Margin (Basis Revenue) (%)	7.72%	10.66%	11.10%	–
	Net Debt (₹ million)	(1,326.16)	(2,346.96)	(2,346.96)	–
Gabriel India Ltd	Revenue from Operations (₹ million)	29,717.38	34,026.26	40,633.81	17%
	Revenue Growth (YoY %)	–	14.50%	19.42%	–
	EBITDA (₹ million)	2,136.90	2,926.00	3,917.00	35%
	EBITDA Growth (YoY %)	–	36.93%	33.87%	–
	EBITDA Margin (Basis Revenue) (%)	7.19%	8.60%	9.64%	–
	Profit After Tax (PAT) (₹ million)	1,323.53	1,787.47	2,449.81	36%
	PAT Growth (YoY %)	–	35.05%	37.05%	–
	PAT Margin (Basis Revenue) (%)	4.45%	5.25%	6.03%	–
	Net Debt (₹ million)	1,070.34	865.70	56.32	–
Uno Minda Ltd	Revenue from Operations (₹ million)	1,12,364.90	1,40,308.90	1,67,746.10	22%
	Revenue Growth (YoY %)	–	24.87%	19.55%	–
	EBITDA (₹ million)	12,419.80	15,852.60	18,740.00	23%
	EBITDA Growth (YoY %)	–	27.64%	18.21%	–
	EBITDA Margin (Basis Revenue) (%)	11.05%	11.30%	11.17%	–
	Profit After Tax (PAT) (₹ million)	7,002.30	9,247.10	10,205.70	21%
	PAT Growth (YoY %)	–	32.06%	10.37%	–
	PAT Margin (Basis Revenue) (%)	6.23%	6.59%	6.08%	–
	Net Debt (₹ million)	12,739.40	14,657.00	22,749.80	–
Sona BLW Precision Forgings Ltd	Revenue from Operations (₹ million)	26,550.10	31,847.70	35,460.21	16%
	Revenue Growth (YoY %)	–	19.95%	11.34%	–
	EBITDA (₹ million)	6,958.00	9,021.00	9,753.00	18%
	EBITDA Growth (YoY %)	–	29.65%	8.11%	–
	EBITDA Margin (Basis Revenue) (%)	26.21%	28.33%	27.50%	–
	Profit After Tax (PAT) (₹ million)	3,953.00	5,173.00	5,996.88	23%
	PAT Growth (YoY %)	–	30.86%	15.93%	–
	PAT Margin (Basis Revenue) (%)	14.89%	16.24%	16.91%	–
	Net Debt (₹ million)	(804.00)	(727.00)	(26,591.00)	–

Source: RHP