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Tenneco Clean Air India

• Tenneco Clean Air India is coming out with a 100% book building; initial public offering (IPO) of 9,52,38,095 shares of 10 each in a price band Rs 378-397 per equity share. 
• Not more than 50% of the issue will be allocated to Qualified Institutional Buyers (QIBs), including 5% to the mutual funds. Further, not less than 15% of the issue will be available for the non-institutional bidders and the remaining 35% for the retail investors.
• The issue will open for subscription on November 12, 2025 and will close on November 14, 2025.
• The shares will be listed on BSE as well as NSE.
• The face value of the share is Rs 10 and is priced 37.80 times of its face value on the lower side and 39.70 times on the higher side.
• Book running lead managers to the issue are JM Financial, Citigroup Global Markets India, Axis Capital and HSBC Securities and Capital Markets (India). 
• Compliance Officer for the issue is Roopali Singh.

Profile of the company

Tenneco Clean Air India is part of the Tenneco Group, a U.S. headquartered key global Tier I automotive component supplier. Tenneco Group generated $16,777 million in revenue in the year ended December 31, 2024. The company’s first manufacturing plant in India was established in 1979 at Parwanoo. It manufactures and supplies critical, highly engineered and technology intensive clean air, powertrain and suspension solutions tailored for Indian OEMs and export markets. The company’s customer base spans across OEMs who use its products in: (i) passenger vehicles (PVs), (ii) commercial vehicles (CVs), which comprises commercial trucks (CTs) and off-highway vehicles (OHs), and (iii) industrial and other applications, which comprises generator sets, small commercial vehicles with gross vehicle weight of less than 3.5 tons, two wheelers and three wheelers (Industrial/Others). The company also sells to the aftermarket primarily through Motocare India (Motocare), a subsidiary of Tenneco LLC and its Group Company.

The company is well-positioned in each of its product offerings. It is the largest supplier of Clean Air Solutions to Indian CT OEMs, with a market share of 57. It is the largest supplier of Clean Air Solutions to Indian OH OEMs (excluding tractors), with a market share of 68%. The company is among the top four suppliers of Clean Air Solutions to Indian PV OEMs, with a market share of 19%. Also, the company is largest supplier of shock absorbers and struts to Indian PV OEMs, with a market share of 52%.

It operates two business divisions, Clean Air & Powertrain Solutions and Advanced Ride Technologies. The Clean Air & Powertrain Solutions division comprises: (i) Clean Air Solutions, where it designs, manufactures and sells exhaust after treatment systems, such as catalytic converters, mufflers and exhaust pipes to OEMs (Clean Air Solutions); and (ii) Powertrain Solutions, where it designs, manufactures and sells engine bearings, sealing systems and ignition products (such as spark plugs and ignition coils) to OEMs and the aftermarket under the Champion brand (Powertrain Solutions). Moreover, the Advanced Ride Technologies division designs, manufactures and sells shock absorbers, struts and advanced suspension systems under the Monroe brand to OEMs and the aftermarket (Advanced Ride Technologies). These products are used for both internal combustion engine (ICE) vehicles and electric vehicles (EVs).

Proceed is being used for:

• Carrying out the Offer for Sale of Equity Shares of face value of Rs 10 each by the Promoter Selling Shareholder
• Achieving the benefits of listing the Equity Shares on the Stock Exchanges

Industry Overview

The Indian PV market is one of the fastest growing in the world and ranked second in terms of annual sales (after China) in 2023. However, Indian PV sector has historically seen significant periodic fluctuations in overall demand. The market is highly underpenetrated. According to CRISIL Intelligence, car penetration of 27.5 per 1,000 people in India as of fiscal 2025 was significantly lower than that of developed countries and even emerging economies such as Brazil, Russia, and Mexico, providing significant headroom for growth, especially given the expected increase in disposable income, faster economic growth, younger population, and increased focus of international OEMs. With penetration below the global average, India offers tremendous growth potential for automobile manufacturers. Moreover, the domestic Commercial Trucks (CTs) industry witnessed significant fluctuations in sales volumes over the past few years, influenced by economic cycles, regulatory changes, and external disruptions.

Meanwhile, Indian automobile industry is shifting towards low or no emission driven by government regulations and increasing need for ecofriendly vehicles. After treatment systems in a vehicle are designed to reduce emissions and pollutants released into the atmosphere. These systems are typically used with ICE vehicles, particularly diesel engines, to minimize the environmental impact of vehicle emissions. The primary goal of after treatment systems is to reduce harmful emissions such as nitrogen oxides (NOx), particulate matter (PM), carbon monoxide (CO), and hydrocarbons (HC). Hence to reduce emissions, the automotive industry is focusing on developing advanced technologies such as exhaust gas recirculation (EGR) system and selective catalytic reduction (SCR) systems that are part of the modern after treatment systems. The use of after treatment systems in construction equipment, tractors and industrial applications (gensets) is also on the rise with tightening emission regulations.

Clean air solutions market at an overall level is estimated at Rs 54,234 million in fiscal 2025. It is expected to grow at a CAGR of 8-10% between fiscal 2025 and fiscal 2030 to reach Rs 79,500-87,500 million. The market is primarily driven by strengthening emissions regulations mandating the need for more advanced after treatment systems. Clean air solutions market for PV is estimated at Rs 34,813 million in fiscal 2025. It is expected to grow at 6-8% CAGR over the fiscal 2025-30 to reach Rs 46,500-51,000 million in fiscal 2030. Passenger vehicles are expected to grow by CAGR 4-6% to reach 5.3-5.7 million units in the fiscal year 2030. As the passenger vehicle grows, the traditional ICE will continue relying on Catalytic system and rise of alternate technologies such as hybrid and CNG drives the demand for Clean air solutions. Increasing environmental awareness and fuel cost benefits are driving CNG vehicles especially in PVs, CNG vehicles require specialized TWCs optimized for methane reduction, creating a niche but growing segment of the Clean air solutions. The SCV/I market is estimated at Rs 5,606 million in fiscal 2025 while SCV market is estimated at Rs 4,105 million for the same period. The industrial category which includes Power-gen (Gas and Diesel gensets) segment stood at Rs 1,501 million with an expected CAGR of 6-8% to reach Rs 2,000-2,200 million by the fiscal year 2030. 

Pros and strengths

Market leading supplier of critical, highly engineered and technology intensive clean air, powertrain and suspension solutions to leading Indian and global OEMs: The company supplies critical, highly engineered and technology intensive clean air, powertrain and suspension solutions tailored for Indian OEMs and export markets, with leading market shares across several automotive industry sub-segments in terms of revenue by vehicle segment for Fiscal 2025. In terms of value (revenue) in Fiscal 2025, the company is the largest supplier of Clean Air Solutions to Indian CT OEMs with a market share of 57%, the largest supplier of Clean Air Solutions to Indian OH OEMs (excluding tractors) with a market share of 68% and among the top four suppliers of Clean Air Solutions to PV OEMs with a market share of 19%. The company is also the largest supplier of shock absorbers and struts to Indian PV OEMs with a market share of 52% in terms of value (revenue) in Fiscal 2025.

Strategically diversified portfolio of proprietary products and solutions well positioned to capture market and industry trends: The company offers a diversified range of customized and proprietary products and solutions for each industry sub-segment including exhaust after treatment systems such as catalytic converters, mufflers and exhaust pipes, engine bearings, sealing systems, spark plugs, shock absorbers and struts and advanced suspension systems. In addition to supplying OEMs, the company generates revenue from the aftermarket and exports, traditionally counter-cyclic revenue streams. As different geographies experience economic cycles at different points of time as opposed to concurrently, it pursues export opportunities to other Tenneco Group companies and OEMs. This revenue structure reduces the impact of downturns in the automotive industry and promotes stability and resilience in its financial performance.

Innovation-focused approach aided by its ability to leverage Tenneco Group’s global R&D initiatives: The company is committed to innovation, supported by its R&D capabilities and the ability to leverage Tenneco Group’s global R&D initiatives and product portfolio. As of June 30, 2025, Tenneco Group is the owner of more than 5,000 active patents and patent applications worldwide and more than 7,500 active trademarks worldwide. Its R&D initiatives, driven by its technical team often in close collaboration with its customers, develop innovative, cost-effective and customized systems and solutions. Currently, the company has nine designs registered under Class 12 - 16 of the Designs Act 2000 and one patent registered under the Patents Act, 1970 in India.

Flexible and automated manufacturing footprint of 12 strategically located plants: The company has 12 manufacturing facilities across seven states and one union territory in India, comprising seven Clean Air & Powertrain Solutions facilities and five Advanced Ride Technology facilities, as of June 30, 2025. The company’s facilities are strategically located in key automotive OEM hubs in India such as Maharashtra, Tamil Nadu, National Capital Region (NCR) and Gujarat. This geographic diversity allows it to serve major automotive markets across India while optimizing freight and logistics cost, providing its clients with timely and reliable access to its products. The company’s facilities are equipped with advanced technologies and quality production processes, including automated production processes with remote diagnostics, robotic cells, and laser markings for product traceability. Its assembly lines are digitized for efficient inspection and recording.

Risks and concerns

Operational dependence on Tenneco Group: The company dependent on entities in the Tenneco Group for its operations, such as the license to use Tenneco Group’s brands and patented designs, technical know-how, purchase of certain parts and materials, and R&D. Any adverse change in its relationship, including the termination of its License Agreement, could have an adverse impact on its business, reputation, financial condition, and results of operations.

High exposure to domestic automotive sector performance: The company derived a significant portion of its revenue from operations, i.e. 81.35%, 83.44%, 82.04%, 83.87% and 83.06% in the three months ended June 30, 2025 and June 30, 2024 and in Fiscal 2025, Fiscal 2024 and Fiscal 2023, respectively, from the passenger vehicle (PV) and commercial vehicle (PV) sectors in India. Any adverse changes in these sectors in India could adversely impact its business, results of operations and financial condition.

Dependent on limited customer base: The company’s top ten customers (based on Fiscal 2025) contributed 80.57%, 82.32%, 81.54%, 83.92% and 77.79% of its revenue from operations in the three months ended June 30, 2025 and 2024 and Fiscals 2025, 2024 and 2023, respectively. If one or more of these customers chooses not to source products from it, its business, financial condition and results of operations may be adversely affected.

Reliance on key suppliers for critical components: The company is dependent on a limited number of suppliers to procure its raw materials and certain components (such as pressed parts, electrodes and bimetal strips). In the three months ended June 30, 2025 and 2024 and Fiscals 2025, 2024 and 2023 its purchases of raw materials from its top ten suppliers for the respective periods/Fiscals contributed to 31.54%, 31.22%, 30.18%, 39.52%, and 42.47% of its raw material purchases (net), respectively. For certain of its components such as pressed parts, electrodes and bimetal strips, it is dependent on a single supplier. Interruptions in the supply of raw materials and components could adversely affect its ability to manufacture its products, execute its projects and consequently its business and results.

Outlook

Tenneco Clean Air India is a subsidiary of Tenneco Inc., a global leader in designing and manufacturing clean air and powertrain products for automotive applications. The company operates within the Clean Air division, focusing on emission control technologies for both light and commercial vehicles. The company is market leading supplier of critical, highly engineered and technology intensive clean air, powertrain and suspension solutions to leading Indian and global OEMs. It has strategically diversified portfolio of proprietary products and solutions well positioned to capture market and industry trends. On the concern side, the company dependent on entities in the Tenneco Group for its operations, such as the license to use Tenneco Group’s brands and patented designs, technical know-how, purchase of certain parts and materials, and R&D. Moreover, the company garnered maximum revenue from limited customers and if one or more of these customers chooses not to source products from it, its business, financial condition and results of operations may be adversely affected.

The issue has been offering 9,52,38,095 shares in a price band of Rs 378-397 per equity share. The aggregate size of the offer is around Rs 3600.00 crore to Rs 3780.95 crore based on lower and upper price band respectively. Minimum application is to be made for 37 shares and in multiples thereon, thereafter. On performance front, the company’s total income decreased by 10.94% to Rs 49,314.45 million in Fiscal 2025 from Rs 55,373.88 million in Fiscal 2024, primarily due to a decrease in its revenue from operations of 10.56% to Rs 48,904.30 million in Fiscal 2025 from Rs 54,676.12 million in Fiscal 2024 driven by a decrease in substrate revenue by 57.44%, partially offset by an increase in VAR of 2.61%. Moreover, the company’s restated profit for the year in Fiscal 2025 increased by 32.72% to Rs 5,531.43 million from Rs 4,167.87 million in Fiscal 2024.

The company’s Clean Air Solutions business is strategically positioned to capitalize on increasingly stringent global and regional emission standards. With its diversified end-market spanning CVs and PVs and increasing CPV trends, the company is well-positioned to sustain its growth irrespective of evolving electrification in PVs / CVs. Going forward, the company plans to target key OEMs across all end markets with modular and standardized emission control solutions that are compliant with BS7, CAFE norms, TREM V, CPCB and CEV. The company’s strategy involves early engagement with both Indian and global OEMs to offer Clean Air Solutions products compliant with future standards. By tailoring global technologies to India-specific needs, it expects this strategy to enable faster time to market and strengthen its market position.