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.

Tenneco Clean Air India , a prominent player in the automotive components sector, has released its financial results for the second quarter of fiscal year 2026, showcasing strong performance and significant new order bookings.

Financial Highlights

Revenue and Profitability Growth

Tenneco Clean Air India delivered a solid performance in Q2FY26, with value-added revenue growing 8.90% year-over-year to reach INR 11,515.00 million. The company's EBITDA for the quarter stood at INR 2,168.00 million, resulting in a robust EBITDA margin of 18.80%.

Strategic Wins and New Order Bookings

The company secured strategic wins worth INR 98.40 billion in incremental lifetime bookings during the quarter. This impressive figure includes INR 17.60 billion in export orders, highlighting Tenneco Clean Air India's growing international presence.

Market Expansion

Tenneco Clean Air India reported two significant achievements in market expansion:

1. Entry into Japanese Passenger Vehicle OEM: The company has successfully entered the Japanese passenger vehicle OEM market, marking a notable expansion of its customer base.

2. Strengthening Position in Shock Absorbers Market: Tenneco Clean Air India has further solidified its position in the shock absorbers market, indicating growth in this product segment.

Outlook

The strong Q2FY26 results, coupled with substantial new order bookings, position Tenneco Clean Air India for continued growth. The company's ability to secure significant export orders and expand into new markets demonstrates its competitive strength in the global automotive components industry.

As Tenneco Clean Air India continues to execute its growth strategy, investors and industry observers will likely focus on how the company leverages these new opportunities while maintaining its strong profitability margins in the coming quarters.