Tenneco Clean Air India Limited delivered robust financial performance in Q3FY26 while securing major business wins and advancing its capacity expansion plans. The company reported strong growth across key metrics, with value-added revenue rising 14.7% year-on-year and EBITDA growing 24.8%, demonstrating sustained operational excellence.

Q3FY26 Financial Performance

The company's quarterly results showcased strong momentum across revenue and profitability parameters. Value-added revenue, which excludes pass-through substrate costs, reached ₹11,941 million compared to ₹10,412 million in the previous year.

Segment-wise Revenue Growth

Both business segments contributed to the overall growth, with Advanced Ride Technologies showing particularly strong performance. Clean Air & Powertrain Solutions generated ₹5,644 million, while Advanced Ride Technologies contributed ₹6,297 million.

Major Business Wins and Technology Leadership

The quarter was marked by significant strategic achievements, including the selection of Tenneco's DaVinci DCx advanced suspension system by a leading Indian OEM for a new-generation flagship SUV platform. This program win represents an estimated annual revenue potential of ₹2,200 million and validates the company's capability to deliver differentiated ride quality through mechanical innovation.

Additionally, Tenneco secured a high-value Clean Air program with a leading global commercial vehicle OEM, featuring a modular inline BSVI aftertreatment system with annual revenue potential of ₹1,150 million. This solution enables cost reduction while maintaining engine captivity for the OEM.

Capacity Expansion Initiative

Following board approval, the company plans to establish a new manufacturing facility in Kharkhoda, Haryana, with a total investment of ₹710 million funded through internal accruals. The greenfield Clean Air plant will strategically enhance proximity to key customers and support expansion across Light Vehicle, Off-Highway, and Tractor segments, with production targeted to commence in Q3 FY27.

Management Outlook

Arvind Chandra, Whole-Time Director and CEO, highlighted the company's focus on engineering consumer experiences beyond automotive parts. He emphasized that the DaVinci DCx suspension system represents a promise to India, bringing global suspension technology specifically tuned for Indian road conditions. The company's export order book remains strong, with current orders covering 100% of projected FY2028 revenue, underpinning double-digit CAGR growth over the next three years.

Tenneco Clean Air India Ltd (TCAIL) has received a Buy rating with a target price of ₹610 from analysts, representing potential upside from the current market price of ₹531. The recommendation is based on the company's strong market position and expected growth trajectory over the coming years.

Company Profile and Market Position

Tenneco Clean Air India Ltd is a subsidiary of the US-based Tenneco Group and operates as a leading Tier-1 automotive component manufacturer in India. The company specialises in clean air solutions, powertrain systems, and advanced ride technologies (ART), serving major original equipment manufacturers across passenger, commercial, and off-highway vehicle segments.

Financial Performance and Outlook

TCAIL has demonstrated strong performance relative to industry benchmarks over the past four years. The company has consistently outperformed domestic peers in terms of operating profitability, reflecting its competitive advantages and operational efficiency.

Analysts project robust growth for the company over the forecast period FY25-28E:

Growth Drivers and Investment Rationale

The positive outlook is supported by several key growth drivers expected to benefit TCAIL over the medium term. These include higher customer price realisation due to upcoming emission norms, premiumisation trends in the automotive sector, deeper penetration with existing customers, and rising contribution from export markets.

The target price of ₹610 is based on 28x FY28E price-to-earnings multiple. Currently, TCAIL trades at approximately 24.80x on FY28E estimated earnings per share, compared to the mean valuation of 27.30x for its industry competitors, suggesting the stock trades at a discount to peers.

Risk Factors

Despite the positive recommendation, analysts have identified key risks that could impact the company's performance. The primary concern relates to the electric vehicle transition, as clean air systems are not required in fully electric vehicles. This shift exposes approximately 20% of the company's value-added revenue to potential disruption.

However, near-term support is expected from hybrid vehicles, commercial vehicles, and the continued dominance of internal combustion engine vehicles in the market. Additionally, potential delays in emission norm updates could add vulnerability to the company's growth prospects.