Event Participants
Executives
3 Himanshu Sharma, Arvind Chandrasekharan, Mahender Chhabra
Analysts
8 Arvind Sharma, Himanshu Singh, Nagraj, Nishit Jalan, Radha Agarwal, Ravi Gupta, Vipul Agarwal, Viraj Sanghvi
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations | INR 15,448 million | +20.2% YoY; driven by higher production volumes, new program launches, content per vehicle growth, and market share gains |
| Value Added Revenue (VAR) | INR 13,816 million | +18.4% YoY; outperformed served addressable market growth |
| EBITDA | INR 2,469 million | +7.9% YoY; margin 17.9% of VAR, impacted by commodity inflation, rupee depreciation, geopolitical disruptions, and listed company costs |
| PAT | INR 1,652 million | Margin 12% of VAR; grew in line with EBITDA excluding prior-year Motocare sale one-time benefit |
| Clean Air & Powertrain VAR | INR 6,626 million | +9.6% YoY; growth in line with apples-to-apples served market (post EV and unserved OEM adjustments) |
| Advanced Ride Technologies VAR | INR 7,190 million | +27.9% YoY; key growth driver from DCx platform penetration, new customer additions |
| CV Clean Air Market Share | 58% | Up from 57% in FY2026; continued share gains |
| PV Shock Absorbers & Struts Market Share | 55% | Up from 52% in FY2026 |
| Off-Highway Clean Air Market Share | 68% | Leadership position maintained |
| Exports as % of Revenue | ~7% | Up from ~5% pre-IPO; export order book split 70:30 internal Tenneco vs third-party OEMs |
| Customer Recoveries & Productivity | 60 bps | Already reflected in EBITDA margin for the quarter |
| Capacity Utilization - ART | >90% | Near-full capacity; new INR 70 crore plant announced in western India |
| Capacity Utilization - CAPT | >80% | Healthy utilization levels maintained |
| Royalty | 2.5% | Consistent with prior year; calculated on revenue reduced by intercompany sales |
Table Rules applied: Ordered by revenue → segments → margins → operational metrics. All units included. Commentary kept concise with YoY context.
Geographic & Segment Commentary
Clean Air & Powertrain Solutions: VAR grew 9.6% YoY to INR 6,626 million. Growth appears modest relative to industry but is actually ahead of the apples-to-apples served market (industry ~16% minus ~3% EV minus unserved large Japanese PV OEM ≈ 8-10%). Multiple program wins including spark plug order from a leading PV OEM (entry into white space), PV exhaust program, cold-end assembly for global OEM CNG platform, and emissions aftertreatment program for domestic CV manufacturer.
Advanced Ride Technologies: VAR grew 27.9% YoY to INR 7,190 million with capacity utilization above 90%. DCx Da Vinci platform continues to expand rapidly — secured multiple application wins with existing customers and added four new customers across conventional and DCx platforms. Launched DCx32 targeting A/B segment vehicles, expanding addressable market significantly. Completed fitment and benchmarking of MARD technology with a leading domestic OEM.
Exports: Revenue exports slightly over 7% of overall revenue (up from 5% pre-IPO). Export order book is attracting 14-20% of total order intake, split 70% Tenneco-to-Tenneco and 30% third-party OEMs. Secured maiden European ATV manufacturer order and heat shield order from Tenneco America. Export margins in line with or better than domestic margins.
Company-Specific & Strategic Commentary
DCx Da Vinci Platform Expansion: DCx has disrupted the Indian suspension market — management aims to put the entire Indian A/B segment on Da Vinci as minimum standard. New DCx32 variant (32mm piston vs standard 35mm) designed for smaller vehicles with plug-and-play fitment at an affordable cost delta. Technology positioned to satisfy 85-90% of comfort needs with minimal cost premium.
Market Share & New Customer Wins: CV Clean Air share up to 58%, PV suspension share up to 55% (from 52%), off-highway at 68%. Four new suspension customers added during the quarter — significant because these include customers where Tenneco had no prior suspension business even on conventional platforms.
White Space Entry: Secured spark plug order from one of India's largest PV OEMs — a new product category and entirely new revenue pool for the company. Also won heat shield order from Tenneco America, validating Indian cost competitiveness. Entry into unserved Japanese OEM expected via CAFE 3 norms in FY28-29 timeframe.
Local Engineering Capabilities: MARD (Mechanical Adaptive Roll Damping) technology developed and validated entirely in India with a leading domestic OEM, reinforcing local R&D strength. Company received Innovation & Performance Award from Mahindra, Technology & Innovation Award from Daimler India CV, and Ride Performance 2026 award from Economic Times.
Capacity Investments: INR 350-450 crore CapEx planned for FY27 across both segments, fully funded through internal accruals (50-60% EBITDA cash conversion). Includes INR 140 crore for two previously announced plants, with one new ART plant in western India at ~INR 70 crore. Company will remain debt-free post-CapEx.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| CapEx FY27 | INR 350-450 crore (indicative) | Supports double-digit top line growth; may be pulled in or pushed out based on demand; fully funded through internal accruals; includes INR 140 crore for two announced plants |
| Order Book | To be reported at H1 (Q2) and full-year | Management committed to half-yearly reporting to smooth out quarterly peaks/troughs; domestic and export split to be disclosed |
| Clean Air Content per Vehicle | 1.2-1.5X increase from BS7/CAFE3 norms | Much smaller than BS4-to-BS6 jump (which was 2X-4X); regulation-driven growth incremental rather than step-change |
| New Product Launches | Heavy launch pipeline through FY28-29 | Da Vinci wins, semi-active suspension, and Clean Air program wins to bear fruit; launches expected between early CY27 and CY29 |
| Export Growth | Continued focus, no change in strategy | Export order book running at 14-20% of total intake; domestic demand growth may temper exports' share of revenue over time |
Risks & Constraints
| Risk | Context |
|---|---|
| Non-Indexed Commodity Inflation | Rubber, plastics, crude oil, LPG, CNG not covered by back-to-back indexation like steel. Middle East war escalations have pushed costs up; only partial recovery achieved (60 bps reflected), with ongoing recovery discussions with OEMs. Management noted margin percentage optically drops even on full recovery due to numerator-denominator effect. |
| Geopolitical Supply Chain Disruptions | Middle East war impacting global supplier community through energy and feedstock costs; duration uncertain, management unable to predict how long elevated costs persist. Could further pressure margins if conflict escalates. |
| US Section 232 Tariffs | Additional tariffs levied by Trump administration on exhaust parts exported from India; affects Tenneco and other suppliers, making export environment tougher. Combined with weak European and American macroeconomic conditions, poses headwind to export growth ambitions. |
| EV Penetration Risk | Electric vehicles don't require exhaust systems; ~3% of served addressable market already subtracted. Mitigated by suspension business benefitting from EV (EVs require superior suspension due to low center of gravity), and company exploring EV-agnostic product strategy. |
| Listed Company Cost Burden | Transition from private to public company added costs for governance, leadership team, compliance. One-time in nature but recurring through ongoing compliance requirements; expected to normalize over time. |
| OEM Concentration in Exports | 70% of export order book is intercompany (Tenneco-to-Tenneco); dependent on group internal sourcing decisions. Section 232 tariffs and global macro weakness could reduce group sourcing appetite. |
| BS7 Regulatory Uncertainty | Final legislation not confirmed — whether BS7 will be BS6-plus or full implementation unknown. Content-per-vehicle upside from regulation likely 1.2-1.5X (much lower than BS4-6's 2-4X); timing of CAFE 3 driven launches (FY28-29) uncertain. |
Q&A Highlights
EBITDA Margin Decline - Segment Attribution & Drivers
- Question: Which segment drove the 170 bps YoY and 43 bps QoQ margin decline — Clean Air or suspension? (Ravi Gupta - InCred)
- Answer: Management does not disclose BU-level margins. The decline is driven by (1) transition from private to public company costs (governance, leadership team), (2) Middle East war-driven inflation in non-indexed commodities (rubber, plastics, crude oil/LPG/CNG). Steel is back-to-back indexed with OEMs, but non-indexed items have only been partially recovered — 60 bps of recoveries reflected in EBITDA margin (Mahender Chhabra; Arvind Chandrasekharan).
Order Book Growth & Reporting Cadence
- Question: Has order book growth improved from the previously guided mid-teens? (Ravi Gupta - InCred)
- Answer: Cannot disclose quarterly — order book will be reported semi-annually (H1 and full year) to smooth peaks and troughs. Management confirmed no change to prior guidance but expressed excitement about DCx momentum, new applications, and four new prestigious customers. New technology wins should also aid margin trajectory (Arvind Chandrasekharan).
Clean Air Growth vs Industry - Apples-to-Apples Comparison
- Question: Why is Clean Air growing only ~10% when industry is at mid-to-high teens? (Himanshu Singh - Baroda BNP Paribas)
- Answer: Served addressable market
16% must exclude EVs (3%) and the unserved leading Japanese PV OEM (no business relationship). After adjustments, apples-to-apples market growth is ~8-10%, and Tenneco's 9.6% growth is ahead. Company plans entry into this white space via CAFE 3 norms, expected FY28-29 (Arvind Chandrasekharan).
Spark Plug Order Strategic Significance
- Question: What is the size of the spark plug order? (Himanshu Singh - Baroda BNP Paribas)
- Answer: Value not yet disclosed. Entry into this large volume OEM base is strategically significant — secured through technology differentiation and time-to-market despite being perceived as a commodity product. Leverages existing customer relationships to expand into new white space (Arvind Chandrasekharan).
Export Strategy, Localization & CapEx
- Question: Where are we in the localization journey for advanced suspension, and what is the export growth trajectory and CapEx plan? (Nishit Jalan - Axis Capital)
- Answer: Localization is a "chicken-and-egg" — will accelerate once volumes reach critical mass. DCx localization will be faster given rapid volume uptake. Exports continue to grow faster than overall market — maiden European ATV order won, heat shield order from Tenneco America demonstrates competitiveness. CapEx guided at INR 350-450 crore for FY27 across both segments, inclusive of announced INR 140 crore plant investments (Arvind Chandrasekharan; Mahender Chhabra).
Export Book Composition
- Question: What is the split between direct OEM exports and Tenneco global entity sales? (Arvind Sharma - Citigroup)
- Answer: Current export order book split ~70:30 — 70% Tenneco-to-Tenneco (India exporting to other global entities), 30% third-party OEMs. Ratio may shift as more third-party opportunities emerge, where Indian cost competitiveness and technology equalization are advantages. Technology from India can be shipped globally at competitive cost structures (Arvind Chandrasekharan).
Cost Pass-Through Status
- Question: Does the Q1 margin reflect full cost pass-through or is recovery still pending? (Vipul Agarwal - HSBC)
- Answer: Partial recovery only — non-indexed commodities need bundling and negotiation with customers. Even at 100% recovery, margin percentage drops due to numerator-denominator math. Management highlighted P3 operating model-driven productivity measures, energy optimization through peak-off usage, and production consolidation as mitigation levers. Duration of Middle East war is the key unknown (Arvind Chandrasekharan; Mahender Chhabra).
Da Vinci Pricing & Adoption Speed
- Question: What is the incremental cost delta for OEMs switching to DCx vs passive suspension? (Vipul Agarwal - HSBC)
- Answer: Proprietary pricing, but the Da Vinci cost delta is minimal — designed to deliver 85-90% of comfort performance of semi-active while keeping cost delta at "a few percentage points." This plug-and-play affordability enables rapid OEM adoption. Semi-active requires electronics/software integration, but Da Vinci is mechanically simple and scalable across vehicle segments (Arvind Chandrasekharan).
BS7/CAFE3 Content Per Vehicle
- Question: Is content per vehicle growth limited to ~20% under BS7 and CAFE3 versus the doubling seen at BS6? (Radha Agarwal - Motilal Oswal)
- Answer: Yes — BS7/CAFE3 will be more incremental (X to 1.2-1.5X) versus BS4-to-BS6 step change. BS7 likely requires dual dosing for NOx/PM compliance and bigger particulate filters; CAFE3 will drive gasoline direct injection penetration requiring gasoline particulate filters. However, Tenneco is technology-ready for Euro 7 and US 2030 standards, positioning for global opportunities (Arvind Chandrasekharan).
Da Vinci Model Coverage & New Customers
- Question: Will Da Vinci be on all trims of a model or just top trims? Are the four new customers Da Vinci-specific? (Viraj Sanghvi - Ambit Capital)
- Answer: Aspiration is all-India suspension upgrade — 90% of Indian vehicles still use conventional suspension. Da Vinci targets the ₹3-35 lakh vehicle range; above ₹35 lakh moves to semi-active. New customers are new across both conventional and DCx platforms. Within customers, allocation can be conventional on lower trims and DCx on premium trims. At 55% market share, four new customers outside that base signals significant competitive strength (Arvind Chandrasekharan).
Cash Deployment & M&A Strategy
- Question: As a debt-free company with negative working capital, how will operating cash flows be deployed? (Nagraj - Individual Investor)
- Answer: 50-60% of EBITDA converts to cash. CapEx of INR 350-450 crore fully funded through internal accruals, maintaining debt-free status. Free cash will be considered for inorganic/M&A opportunities — company evaluating options but not ready to announce. Exploring products that are powertrain-agnostic (work on both ICE and EV) (Arvind Chandrasekharan).
DCx32 vs Standard DCx
- Question: What differentiates DCx32 from existing DCx? (Himanshu Singh - Baroda BNP Paribas)
- Answer: DCx32 refers to 32mm piston diameter (vs 35mm standard). Designed for A and B segment vehicles — smaller rod diameter, outer tube dimensions proportionate. Allows Tenneco to compete at the entry-level end of the market, expanding addressable pool of vehicles from ~₹3 lakh price point upward. Demand is already emerging from AB segment customers who prompted the development (Arvind Chandrasekharan).
Seasonality & Margin Pattern
- Question: Is Q1 margin decline seasonal, particularly in the standalone Clean Air business? (Vipul Agarwal - HSBC)
- Answer: Seasonality is typical for auto suppliers — Q1 sees lower HCV share relative to MCV, with festive season uptick later in the year. Margin pattern will be consistent with prior years' trends. Demand through Q2 looks strong per OEM projections, assuming Middle East conflict doesn't deteriorate further (Arvind Chandrasekharan).
Key Takeaway
Tenneco Clean Air India delivered a strong Q1 FY27 with revenue from operations up 20.2% YoY to INR 15,448 million and VAR growth of 18.4% to INR 13,816 million, outpacing the served addressable market. EBITDA margin held at 17.9% of VAR despite commodity inflation, geopolitical disruptions, and listed-company costs, supported by 60 bps of customer recoveries and productivity gains. The company's strategic momentum is anchored in Advanced Ride Technologies (VAR up 27.9% YoY), driven by the DCx Da Vinci platform's accelerating adoption — four new customers added, DCx32 launched for A/B segment vehicles, and MARD technology validated with a domestic OEM. Clean Air secured a landmark spark plug order from a leading PV OEM, opening new white space. Market share expanded across CV Clean Air (58%), PV suspension (55%), and off-highway (68%). Management guided INR 350-450 crore CapEx for FY27, fully internally funded while maintaining debt-free status, with order book and domestic/export split to be disclosed at H1. Exports remain strategic but face headwinds from US Section 232 tariffs and soft global macro conditions. Watch items include non-indexed commodity cost recoveries, Middle East conflict durability, and conversion of the record program win pipeline into production through FY27-29.