The IPO has already drawn strong interest in the grey market, where it commands a GMP of around 16%, reflecting healthy investor appetite ahead of listing.
Tenneco Clean Air India is one of the largest players in India’s automotive component space, manufacturing and exporting clean air, powertrain, and suspension systems for both domestic and international markets. The company holds leading market shares across segments, 57% in commercial trucks, 68% in off-highway, 19% in passenger vehicles, and 52% in shock absorbers, and serves marquee OEM clients like Maruti Suzuki, Hyundai, Tata Motors, and Ashok Leyland.
In FY25, the company reported strong financials with Rs 4,890 crore in revenue, an EBITDA margin of 16.7%, PAT of Rs 553 crore, and a return on capital employed of nearly 57%. It operates 12 automated plants across India with over 80% capacity utilisation and 86% domestic sourcing, supported by two Indian R&D centres linked to Tenneco’s 39 global research facilities.
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Brokerages say Tenneco Clean Air India’s leadership in high-margin automotive components, deep OEM relationships, and access to global technology make it a strong structural story in India’s manufacturing chain. The company’s exports to over 20 countries, including the US, Germany, and Japan, position it as a key part of Tenneco’s global supply network.However, the company’s reliance on its parent for intellectual property and technology is a risk to watch. It pays a 2.5% royalty on gross revenue and a small additional fee for using Tenneco’s global operating system. Still, these are considered standard arrangements for global subsidiaries, and analysts believe they do not significantly dilute profitability.
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According to Canara Bank Securities, the company’s valuations appear reasonable, with a P/E of 29x and P/B of 12.7x at the upper price band, compared with peers trading at 48x on average.
“Tenneco Clean Air India Ltd., backed by the US-based Tenneco Group, holds strong market positions and robust OEM partnerships. Despite dependence on its parent for IP, it maintains solid fundamentals and attractive margins. We recommend a Subscribe rating for both listing gains and long-term growth potential,” the brokerage said in its note.
Industry experts believe the IPO comes at a favourable time for the auto components sector. The Indian passenger vehicle market continues to expand, supported by rising demand for SUVs, stricter emission norms, and a growing shift toward cleaner and more efficient engine technologies.
According to CRISIL, domestic PV sales are expected to grow at 4–6% CAGR through FY2030, with rising penetration of CNG, hybrid, and electric models creating new opportunities for component suppliers like Tenneco. The company’s well-diversified revenue base across domestic and export markets, strong balance sheet, and consistent cash flows could make it stand out among recent IPOs in the auto space.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)