3 weeks ago
Tenneco Clean Air: Can Suspension Tech Drive Next Growth?
This story is about a company that makes parts for cars and trucks in India.
Its name is Tenneco Clean Air India.
One of its special parts is a shock absorber called DaVinci, which makes rides smooth over bumps and potholes.
A car called the Mahindra XUV 7XO got lots of praise because of this part.
The company also makes filters and converters that keep car exhaust clean, and most trucks built in India use them.
The Indian government keeps making rules saying cars must pollute less, so carmakers need newer and better parts.
Recently, the company sold its shares to the public for the first time, and investors lined up to buy them.
It made more money last year than ever before and has orders to keep it busy until 2028.
One worry is electric cars, which do not need exhaust parts, but trucks and tractors will keep using them for a long time.
Tenneco Clean Air India's November 2025 IPO, a Rs 3,600 crore offer-for-sale by Apollo Global-owned Tenneco Inc., was oversubscribed 61.7 times and listed at Rs 505, a 27% premium over the Rs 397 issue price.
The company supplies Mahindra's DaVinci DCx damper, refined through 905 iterations, and the Monroe CVSAe semi-active suspension, India's first electronically controlled suspension.
FY26 was a record year: revenue grew 10.5% to Rs 5,404 crore, EBITDA margin hit a record 18.8%, and PAT rose 9.2% to Rs 604 crore.
The Rs 12,400 crore lifetime order book covers more than 100% of FY28 revenue targets, with exports making up 14-20% of new bookings versus 5-6% of current sales.
Management expects BS VII and CAFE III norms to unlock a Rs 1,300-1,400 crore opportunity, while the ~57% of revenue tied to internal combustion engines faces electrification risk.
- Who
- Tenneco Clean Air India, the Indian arm of US components maker Tenneco Inc., controlled by private equity firm Apollo Global, which still owns 74.79% through Tenneco Mauritius.
- What
- A deep dive into the company's clean air/emissions and suspension businesses following its heavily oversubscribed IPO, covering record FY26 results, an Rs 12,400 crore order book, and growth driven by DaVinci DCx and tightening emissions rules.
- Where
- India, across 12 manufacturing plants, with exports to North America, South America, Europe and Asia.
- When
- IPO in November 2025; record FY26 results reported in 2026, with the stock rallying from Rs 438 to Rs 657 in eight months since listing.
- Why
- Tightening emission regulations (BS VII, CAFE III) and affordable premium suspension technology are expected to drive the next phase of growth, though electrification threatens part of the ICE-oriented core business.
Growth Optimists
Value Skeptics
Outlook for the core business
Growth Optimists
The clean air business is a regulation-driven compounder: every tightening of emission norms (BS VII, CAFE III) increases complexity and content per vehicle, benefiting the market leader with ~57% share in Indian commercial vehicle clean air systems and ~52% of passenger vehicle shocks and struts.
Value Skeptics
Roughly 57% of revenue serves the internal combustion engine's exhaust and innards, products an EV simply does not have, putting a clock on the core business even though trucks, tractors and gensets are expected to electrify more slowly.
Suspension growth potential
Growth Optimists
DaVinci DCx delivers 85-90% of a fully electronic suspension at roughly the cost of a dinner for two at a five-star hotel, making premium ride quality affordable for the mass market; it is patented, not exclusive to Mahindra, and talks are on with Indian, Korean and Japanese OEMs, plus evaluation for China and Europe.
Value Skeptics
DaVinci must expand beyond the single Mahindra programme (around Rs 220 crore annual revenue potential) to a broader set of OEMs, while exports scale meaningfully from 5-6% of sales, for the premium valuation to have an operational foundation.
Valuation
Growth Optimists
The stock deserves a premium for exceptional capital efficiency, a negative cash conversion cycle, Rs 1,429 crore FY26 operating cash flow (over 2x reported operating profit), record margins and paid-for growth backed by a Rs 12,400 crore order book.
Value Skeptics
At roughly Rs 657 per share and a market cap of about Rs 22,200 crore (~36x FY26 earnings), a trailing PEG of 2.0 with 14% EBITDA growth does not support current valuations unless ART business becomes a meaningful second growth engine.
Key facts
- IPO Size
- Rs 3,600 crore (offer-for-sale by parent)
- IPO Subscription
- 61.7 times oversubscribed
- Issue / Listing Price
- Rs 397 issue; listed at Rs 505 (27% premium)
- Parent Stake
- Tenneco Inc. (via Tenneco Mauritius) owns 74.79%
- FY26 Revenue
- Rs 5,404 crore (+10.5% YoY)
- FY26 EBITDA
- Rs 925 crore; record 18.8% margin
- FY26 PAT
- Rs 604 crore (+9.2% YoY)
- Order Book
- Rs 12,400 crore lifetime orders; covers >100% of FY28 revenue targets
Sources
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