TENNECO CLEAN AIR INDIA LIMITED IPO Explain

Tenneco Clean Air IPO Overview

India’s largest CV clean air solutions provider raising ₹3,600 cr via 100% OFS (9.07 cr shares). Price: ₹378-397. Lot: 37 shares (₹14,689 min). Zero proceeds to company – all to promoter Tenneco Mauritius. Listing: BSE/NSE Nov 19.

Lead: JM, Citi, Axis, HSBC. Backed by Apollo Global. Competes with Faurecia, Eberspächer, Bosch.

IPO DETAILED INFORMATION

Issue Details

Parameter	Details
IPO Type	Mainboard
IPO Open Date	12 November 2025 (Wednesday)
IPO Close Date	14 November 2025 (Friday)
Anchor Investor Bidding	11 November 2025 (Tuesday) – Raised ₹440 cr from 14 investors (SBI MF, Kotak Life, WhiteOak, ValueQuest) for 2.75% stake
Allotment Date	17 November 2025 (Monday) – Expected
Credit to Demat	18 November 2025 (Tuesday) – Expected
Refund Initiation	18 November 2025 (Tuesday) – Expected
Listing Date	19 November 2025 (Wednesday) – Tentative
Price Band	₹378 – ₹397 per share
Face Value	₹10 per share
Lot Size	37 shares
Min Investment (Retail)	₹14,689 (1 lot of 37 shares at upper band)
Max Investment (Retail)	₹1,90,961 (13 lots of 481 shares)
sHNI Investment	₹2,05,646 (14 lots / 518 shares)
bHNI Investment	₹10,13,541 (69 lots / 2,553 shares)
Issue Size	₹3,600 crore total (Increased from ₹3,000 cr planned in June DRHP)
Fresh Issue	NIL
Offer for Sale (OFS)	₹3,600 crore (100% OFS) – 9,06,80,101 equity shares
Total Shares Offered	9,06,80,101 equity shares
Listing	BSE & NSE (Mainboard)
Post-Issue Market Cap	₹16,000+ crore (at upper price band ₹397)
P/E Ratio	~32x (FY25 basis)
EPS	₹12.40 (FY25 basis)
D/E Ratio	-0.17 (Net cash position – Zero debt!)
ROE	46.65% (FY25)
ROCE	~50%+ (exceptional)

Issue Break-up

Category	Allocation
QIB (Qualified Institutional Buyers)	Not less than 50% of Net Offer
NII (Non-Institutional Investors)	Not less than 15% of Net Offer
Retail Individual Investors	Not less than 35% of Net Offer (normal allocation)

Selling Shareholder (OFS 100%)

Promoter Selling 9,06,80,101 shares for ₹3,600 crore:

1. Tenneco Mauritius Holdings Limited – Complete exit/partial divestment

Promoter Group (No selling but continuing shareholders):

• Tenneco (Mauritius) Limited
• Federal-Mogul Investments B.V.
• Federal-Mogul Pty Ltd
• Tenneco LLC

Important Note: This is a 100% Offer for Sale. The company will NOT receive ANY proceeds from the IPO. All money (₹3,600 crore) goes to promoter Tenneco Mauritius Holdings for its exit/divestment.

Objects of the Issue (Fund Utilization)

Since this is 100% OFS:

• ZERO proceeds to company – All ₹3,600 crore goes to selling shareholder Tenneco Mauritius Holdings
• Company receives no capital for expansion, debt repayment, working capital, or any business purposes
• Purpose: Provide exit/liquidity to promoter, comply with SEBI listing norms, enable future fundraising capability
• Investor benefit: Listing provides liquidity and price discovery for shares, but no capital infusion strengthens company balance sheet

Lead Managers & Registrar

Book Running Lead Managers (BRLMs):

• JM Financial Limited
• Citigroup Global Markets India Private Limited
• Axis Capital Limited
• HSBC Securities and Capital Markets (India) Private Limited

Registrar:

• MUFG Intime India Private Limited (Link Intime India Private Limited)
• Phone: +91-22-4918 6270
• Email: [email protected]
• Website: https://in.mpms.mufg.com/Initial_Offer/public-issues.html

Promoters & Management

Parent Company:

• Tenneco Inc. (USA) – Global Tier-I automotive component supplier, Fortune 500 company
• Apollo Global Management – Acquired Tenneco Inc. for $7.1 billion (November 2022), took company private
• Tenneco Group 2024 global revenue: USD 16,777 million (~₹1.4 lakh crore)

Key Management (India):

• Arvind Chandrasekharan – Whole-Time Director & Chief Executive Officer
• Mahender Chhabra – Chief Financial Officer
• Rishi Verma – President (India)
• Deepak Garg – Director, M&A

Company History:

• 1979: Tenneco’s first India plant at Parwanoo (legacy 46 years)
• 2018: Tenneco Clean Air India Limited incorporated (current entity)
• October 2018: Tenneco Inc. acquired Federal-Mogul (doubled size, increased debt)
• November 2022: Apollo Global took Tenneco Inc. private ($7.1B deal)
• 2022-2025: Transformation under Apollo – debt reduction, operational efficiency, profitability improvement
• November 2025: India unit IPO for partial promoter exit

Company Contact:

• Registered Office: 102, First Floor, Max House, Okhla Phase III, New Delhi – 110020
• Corporate Office: 2nd Floor, Tower 4B, DLF Corporate Greens, Sector 74A, Gurugram – 122004, Haryana
• Phone: +91-124-473-1100
• Website: www.tenneco.com (Global), India unit website TBD

COMPANY OVERVIEW

Establishment & Background:

• Indian legacy: First plant established 1979 at Parwanoo – 46 years of operations
• Current entity: Incorporated in 2018 as Tenneco Clean Air India Limited
• Industry: Automotive Components – Clean Air (Emission Control), Powertrain, Suspension Solutions
• Part of Tenneco Inc. (USA) – Fortune 500, global Tier-I automotive supplier
• Headquarters: Gurugram, Haryana
• Backed by Apollo Global Management (took Tenneco Inc. private in $7.1B deal, Nov 2022)

Business Model:

• Integrated automotive component manufacturer serving OEMs and aftermarket across PV, CV, off-highway, industrial segments
• Three product divisions:
  1. Clean Air & Powertrain Solutions (52.6% revenue): Emission control systems (catalytic converters, diesel particulate filters, mufflers, exhaust pipes), powertrain bearings, ceramic spark plugs
  2. Advanced Ride Technologies (47.4% revenue): Shock absorbers, struts, suspension systems, coil springs
  3. Aftermarket: Replacement parts sold through group company Motocare India
• Revenue Model: OEM sales (direct to vehicle manufacturers), aftermarket distribution, exports
• Value Proposition: Technology leadership via global R&D, local manufacturing cost advantage (88-90% localization), compliance with Bharat Stage VI and global emission norms

Market Position:

• Market Leader positions (CRISIL Report, March 31, 2025):
  • 57% market share – Clean air solutions for CV OEMs (largest supplier)
  • 68% market share – Clean air solutions for off-highway OEMs excluding tractors (largest)
  • 52% market share – Shock absorbers & struts for PV OEMs (largest)
  • 19% market share – Clean air solutions for PV OEMs (among top 4 suppliers)
• Among top five automotive component companies in India by revenue (FY25: ₹4,931 cr)

Operations:

• 12 manufacturing facilities across 7 states + 1 union territory:
  • 7 facilities: Clean Air & Powertrain Solutions
  • 5 facilities: Advanced Ride Technologies
  • Strategic locations near key OEM hubs (Parwanoo, Hosur, Bawal, Pune, etc.)
• 2 R&D Technical Centers collaborating with Tenneco’s 39 global engineering facilities
• 119 customers in FY25 including all major OEMs: Maruti Suzuki, Tata Motors, Mahindra & Mahindra, Hyundai, Honda, Ashok Leyland, Royal Enfield, Bajaj Auto, Cummins, Daimler, Eicher, Hero MotoCorp, etc.
• 88-90% localization of raw materials (excluding substrates sourced domestically 91-92%)
• Export markets: Serving global Tenneco Group and third-party OEMs
• Certifications: ISO 9001 (quality), ISO 14001 (environment), ISO 45001 (health & safety)

Company Strengths

1. Dominant Market Leadership – #1 in CV, Off-Highway, PV Shock Absorbers:
   • Commanding 57% market share in CV clean air solutions (largest supplier)
   • 68% share in off-highway clean air (excl. tractors) – near-monopoly
   • 52% share in PV shock absorbers/struts – market leader
   • Leadership positions create pricing power, customer stickiness, and high entry barriers
   • Top 10 customers have partnered for average 19+ years – testament to quality and relationships
2. Part of Global Tier-I Giant Tenneco Inc. – Technology & Scale Advantage:
   • Backed by Fortune 500 parent Tenneco Inc. (USD 16.8B global revenue 2024)
   • Access to 5,000+ patents and 7,500 trademarks from Tenneco Group’s global IP portfolio
   • Collaboration with 39 global R&D centers for technology adaptation to Indian market
   • Apollo Global ownership (since Nov 2022) provides financial stability and strategic direction
   • Ability to serve global customers through parent’s network
3. Exceptional Financial Turnaround – 33% PAT Growth, 46.7% ROE, Zero Debt:
   • FY25 PAT: ₹553 cr (+33% YoY) despite 11% revenue decline
   • EBITDA margin expanded from 11.19% (FY24) to 16.67% (FY25), touching 17.80% in Q1 FY26
   • PAT margins improved from 7.89% (FY23) to 11.31% (FY25), reaching 13.07% in Q1 FY26
   • ROE of 46.65% – among highest in automotive component sector
   • ROCE ~50%+ – exceptional capital efficiency
   • Net cash position (D/E -0.17) – zero debt provides financial flexibility
4. Sticky Customer Relationships & Diversified OEM Base:
   • 119 diverse customers in FY25 including ALL top OEMs
   • Long-term partnerships spanning decades reducing customer concentration risk
   • Diversified across PV, CV, 2-wheeler, 3-wheeler, off-highway, tractor segments
   • Aftermarket revenue stream providing resilience (replacement cycle demand)
5. Strategic 88-90% Localization & Cost Advantage:
   • High localization reduces import dependency, logistics costs, forex risk
   • 91-92% of raw material costs (excluding substrates) from domestic sources in FY23-25
   • Cost-efficient Indian manufacturing vs global alternatives
   • Enables competitive pricing for price-sensitive Indian market
   • Supports profitability despite revenue headwinds
6. Government Policy Tailwinds – Emission Norms Driving Demand:
   • Bharat Stage VI (BS-VI) norms mandate advanced emission control systems
   • Upcoming BS-VII, CAFE (fuel efficiency), TREM V (tractors), CPCB industrial standards
   • Every regulatory tightening increases content-per-vehicle (CPV) for clean air products
   • India’s automotive market growth (PV, CV, EV adoption) expanding TAM
   • PV clean air market: ₹3,481 cr (FY25) → ₹4,650-5,100 cr (FY30) at 6-8% CAGR
7. 12 Strategically Located Facilities & Operational Excellence:
   • Manufacturing footprint near OEM hubs ensuring just-in-time delivery
   • Economies of scale from integrated operations
   • Collaboration with parent’s global operations for process optimization
   • Quality certifications enhancing credibility

Key Risks & Challenges

1. 100% OFS – Zero Capital to Company, Entire ₹3,600 Cr to Promoter Exit:
   • Company receives ZERO funds from IPO – all proceeds go to Tenneco Mauritius Holdings
   • No capital for capacity expansion, R&D, working capital, or growth initiatives
   • Signals promoter partial exit rather than business investment
   • Investors buying shares but not funding company growth
   • Post-IPO, company must rely on internal accruals or future debt for expansion
2. Revenue Decline of 11% (FY24 to FY25) – Top-Line Pressure:
   • Revenue declined 11% from ₹5,537 cr (FY24) to ₹4,931 cr (FY25)
   • Despite PAT growth (margin expansion offsetting volume decline), shrinking top-line raises sustainability concerns
   • Indicates lower OEM production volumes, competitive pressures, or market share loss
   • Q1 FY26 revenue ₹1,285.6 cr (+1.2% YoY) – marginal recovery but growth anemic
   • Volume headwinds may persist if auto industry faces slowdowns
3. Intense Competition from Global & Domestic Tier-I Suppliers:
   • Key clean air competitors: Faurecia (technology leader), Tenneco (fast follower), Eberspächer (price player)
   • Competes with Bosch, Timken India, SKF India, ZF, Gabriel India, Uno Minda
   • Global giants (Magna, Continental, BorgWarner, Valeo) eyeing India market
   • Domestic players (Minda, Motherson, Samvardhana Motherson) expanding
   • Price competition and OEM cost pressures eroding margins
4. Automotive Industry Cyclicality & EV Transition Risk:
   • Automotive industry subject to economic cycles affecting demand
   • COVID-19 accelerating transition from combustion to electric/hydrogen propulsion
   • EVs require minimal/no emission control systems – threatens core clean air revenue (52.6%)
   • “Over 5 years, definitely will see faster transition to electric or hydrogen vehicles” – Former Tenneco VP
   • ICE vehicle phase-out poses existential long-term risk to clean air business
5. High Parent Debt & Potential Obligations:
   • Tenneco Inc.’s Federal-Mogul acquisition (Oct 2018) doubled size but also debt burden
   • Apollo Global took company private due to financial stress (shares at $9.98, acquired at $20)
   • While India unit debt-free, parent leverage may create future cash extraction pressures
   • Transfer pricing, royalty payments, or cash sweeps possible if parent needs liquidity
   • OFS itself may indicate parent monetizing India asset to reduce group debt
6. Raw Material Cost Volatility & Margin Pressure:
   • Dependent on steel, aluminum, precious metals (platinum, palladium, rhodium for catalytic converters)
   • Rising raw material costs and labor expenses impacting profit margins
   • Commodity price spikes can compress margins if unable to pass to OEMs
   • OEM price negotiations typically annual/multi-year – lag in cost recovery
   • Despite current 16.7% EBITDA margin, sustaining requires continuous cost management
7. Regulatory & Technology Disruption – Continuous Adaptation Required:
   • Stringent environmental regulations require continuous adaptation, posing production and compliance challenges
   • Shift to new technology (electrification, connectivity, autonomous) – Tier-1s heavily relying on traditional components face challenges
   • Need for ongoing R&D investment to stay relevant
   • Risk of technology obsolescence if unable to match competitors’ innovation pace
   • Rapid technological advancements – staying ahead crucial for competitiveness

Disclaimer: This information is based on publicly available sources including SEBI RHP filings and company disclosures. Investors should conduct their own research and consult with financial advisors before making investment decisions. Past performance is not indicative of future results. This is a 100% OFS with ZERO proceeds to company. Revenue declined 11% YoY (FY25). EV transition poses long-term risk to clean air business (52.6% of revenue). Grey Market Premium of ₹65-96 (16-24% expected listing gain) is unofficial.