Tenneco Clean Air India: Driving Growth with Innovation and Strategic Expansion

Tenneco Clean Air India Limited, a key player in the automotive components sector, has reported a robust financial performance for Q3 and 9M FY26, underscoring its strategic execution and market leadership. The company's Value Added Revenue (VAR) grew by a healthy 15% year-on-year in Q3 FY26, reaching INR 119.41 crore, and by 10% for the nine-month period, totaling INR 351.22 crore. This growth reflects strong volumes and the successful launch of new programs, demonstrating sustained momentum in a rapidly evolving Indian automotive market.

Profitability remained strong, with EBITDA margins at an impressive 18.6% for Q3 and 19.0% for 9M FY26. These industry-leading margins are attributed to operating leverage, strategic commercial actions, and effective cost management. However, the Profit After Tax (PAT) for Q3 saw a 5% year-on-year decline, primarily due to a one-time expense of INR 20.3 crore related to incremental provisioning for a new labour code. Excluding this one-off impact, the underlying business performance showed significant improvement, with adjusted PAT margins aligning well with EBITDA performance.

Innovation Driving Market Leadership

A significant highlight of the quarter was the successful launch of Tenneco's DaVinci DCx suspension technology with a leading Indian passenger vehicle OEM. This innovation, expected to generate approximately INR 220 crore in annual revenue, reinforces Tenneco's leadership in shock absorbers in India. The DaVinci DCx system, a purely mechanical solution, is specifically tuned for Indian road conditions, offering enhanced driver and passenger comfort through a patented shim stack disc design. This cost-effective technology avoids the complexity and expense of electronic systems, positioning it as a disruptive force against conventional mechanical dampers that dominate over 90% of passenger vehicles in India.

In the Clean Air segment, Tenneco secured a strategic program win with a leading EU commercial truck OEM for an aftertreatment solution. This win, with an annual revenue potential of approximately INR 115 crore, is set to boost market share and demonstrates the company's ability to combine engineering flexibility with rapid execution. To support the Clean Air segment's growth trajectory, the Board has approved the development of a greenfield plant in Kharkhoda, Haryana. This INR 71 crore capex project, slated for production in Q3 FY27, will enhance proximity to key customers and support awarded programs across light vehicle, off-highway, and tractor segments.

Diversified Revenue and Export Momentum

Tenneco Clean Air India's revenue mix is well-diversified across segments and end markets. For FY25, Clean Air & Powertrain Solutions contributed 52.6% of VAR (INR 2,314.4 crore), while Advanced Ride Technologies accounted for 47.4% (INR 2,085.6 crore). The end-market split for FY25 VAR shows Passenger Vehicles as the largest contributor at 63.5% (INR 2,794 crore), followed by Commercial Vehicles (CT + OH) at 21.5% (INR 946 crore), Industrial / Others at 6.8% (INR 299.2 crore), Aftermarket at 5.5% (INR 242 crore), and Other Operating Revenue at 2.7% (INR 118.8 crore).

Exports are emerging as a significant growth driver, now contributing over 20% of the company's lifetime order book, a substantial increase from 5% previously. This surge is bolstered by recent US tariff easing and anticipated EU duty reductions, which are expected to significantly improve competitiveness and expand export opportunities, particularly for small, high-value components. The company's robust order book, covering 100% of FY28 revenue, provides clear visibility for a double-digit CAGR over the next three years, outperforming market growth expectations.

Strategic Outlook and Industry Tailwinds

Management emphasized that the company is uniquely positioned to benefit from favorable industry tailwinds, including low vehicle penetration, stricter emissions norms, and increasing premiumization in the Indian automotive market. The shift towards SUVs and premium platforms, coupled with rising expectations for comfort and safety, aligns well with Tenneco's portfolio across emissions, powertrain, and advanced suspension systems. India's growing role as an export hub, driven by lower costs and supportive government policies, further enhances Tenneco's growth prospects.

In conclusion, Tenneco Clean Air India Limited's Q3 and 9M FY26 performance reflects a company executing with discipline and strategic foresight. Through continuous innovation, capacity expansion, and a strong focus on exports, Tenneco is poised for sustained growth, reinforcing its position as a leader in critical automotive systems. The company's commitment to technology-led differentiation and capital efficiency underpins its confident outlook for the coming years.