Tenneco Clean Air India Ltd Q1 FY27 Earnings Analysis

- Clean Air business anticipates significant growth post-2027 with entry into the largest PV OEM supplier panel, driven by Gasoline Particulate Filter technology. - Suspension business (especially DaVinci DCx) shows strong traction with 3-4 OEMs interested, targeting 50% disruption in the ~5.5 million Indian passenger vehicle market. - Export order book is robust and growing faster than current export sales; exports expected to ramp up significantly around 2027-2029. - New plants in North and West India commissioned by 2028-2029 to support volume growth and new technology. - Overall business targeting double-digit growth over the medium term, supported by a lifetime order book of INR124,000 million. - Focus on localization (~90%) to sustain margins amid growth. - Advanced Ride Technologies showing strong momentum with 19.7% growth year-on-year, outpacing the market.

- The company expects double-digit growth in value added revenue over the medium term, supported by a strong lifetime order book of INR124,000 million. - EBITDA margins have improved, reaching a record 18.8% in FY26, and are expected to remain stable due to operational efficiencies driven by the P3 framework. - Profit after tax grew 9.3% in FY26; margins improved to 12.3% with continued operating leverage and higher other income. - Return on capital employed (ROCE) significantly improved to 94% in FY26, indicating better profitability and capital efficiency. - Export orders and new plants commissioning (North and West India) will drive volume growth, with peak volumes expected by FY28-FY29. - Growth in Advanced Ride Technologies is strong (19.7% YoY), contributing to overall profitability. - Ongoing capacity expansion and a resilient business model position the company well for sustained profitable growth and long-term value creation.

- Two new plants announced: - Clean Air plant expansion in North India to support Japanese customers and commercial truck/off-highway customers. - New suspension plant in West India to manage growing volumes driven by market growth and new technologies (DaVinci DCx and semi-active suspension). - Board approval received for West India plant; commissioning expected within 6-12 months, with peak volumes around 2028-2029. - The investments align with scaling export orders and increasing domestic production capabilities for both Clean Air and Advanced Ride Technologies. - Capex-to-revenue ratio expected around 1:3 (capex to steady state revenue). - Potential future plant setup for bearing business under evaluation based on capacity requirements but not finalized yet.

The transcript does not mention any current or planned new fundraising through debt or equity. Key points related to financial standing and investments include: - The company is debt-free with a net debt-to-equity ratio of negative 0.4, indicating strong financial health and ample financial flexibility. - It generated strong cash flow (58% of EBITDA) in FY26 after capex of INR1,150 million. - Planned disciplined capacity investments totaling approximately INR1,400 million for new plants in North and West India. - No mention of raising capital through new debt or equity; emphasis on self-financed growth through cash flow and controlled capex. - Past IPO was heavily oversubscribed, reflecting strong investor confidence, but no plans for new equity issuance are indicated. Thus, based on the available information, there are no announced plans for new fundraising via debt or equity.

- As of March 31, 2026, the lifetime order book stands at INR 124,000 million. - This order book provides 100% visibility of the FY 2028 internal revenue target. - The order book underpins a double-digit growth trajectory over the medium term. - Export order book has been strengthened recently and is expected to continue growing. - Export order book growth is driven by both exporting to third-party OEMs and exporting to Tenneco entities in Europe and the US. - New plant setups in North India (Clean Air facility) and West India (Advanced Ride Technologies plant) are aligned with meeting the future demand underpinned by the order book. - Export volumes are expected to start ramping up around 2027-2028 and peak around 2028-2029. (Information sourced mainly from Pages 4, 8, and 9.)