Core Viewpoint - Tenneco Clean Air India plans to raise ₹3,600 crore through an IPO, with a significant reduction in the promoter group's stake from 97.3% to 74.8% post-IPO, while the company shows strong market leadership but has experienced single-digit revenue growth over the past two years [5]. Business - Tenneco India operates in two divisions: clean air solutions and shock absorbers, with over 60% of its revenue derived from its top five customers [5]. - The company is net cash positive and is the largest supplier of Clean Air Solutions to Indian commercial trucks and off-highway segments, holding a market share of 57% and 68% respectively [5]. - It is also the largest supplier of shock absorbers and struts to Indian passenger vehicles, with a market share of 52% [5]. Financials - Revenue increased to ₹4,890.4 crore in FY25 from ₹4,827.4 crore in FY23, with value-added revenue (excluding passthrough sales) rising by 6% annually to ₹4,380.1 crore [5]. - Net profit surged by 20.5% to ₹553.1 crore between FY23 and FY25 [5]. - The operating margin (Ebitda margin) improved to 16.7% in FY25 from 11.8% in FY23, outperforming peers who have margins between 10-28% [5]. - Royalty expenses as a percentage of revenue decreased to 2.3% in FY25 from 4.7% in FY24 [5]. - Return on capital employed (ROCE) rose to 56.8% in FY25 from 33.5% in FY23 [5]. Valuation - The company is seeking a price-earnings multiple of 29, compared to a range of 18-86 for peers such as SKF India, Sona BLW Precision Forging, and Gabriel India [4][5].

IPO Overview - The IPO size is Rs 3,600 crore, entirely an offer for sale (OFS) of 9.07 crore equity shares, with proceeds going to existing shareholders, primarily global promoters [1][14] - The price band is set at Rs 378–397 per share, with a minimum bid of 37 shares per lot, requiring an investment of Rs 14,689 at the upper end [2][14] - The grey market premium (GMP) is around Rs 95 per share, indicating a potential listing price of Rs 490–495 if market sentiment remains stable [4][14] Company Background - Tenneco Clean Air India is a subsidiary of Tenneco Inc, a US-based global automotive supplier, with promoters holding 97.25% of equity, which will reduce to 74.79% post-issue [5][14] - The company manufactures clean air and powertrain systems, including catalytic converters, diesel particulate filters, mufflers, and exhaust pipes, serving leading automotive OEMs [6][14] - It also designs shock absorbers, struts, and advanced suspension systems through its Advanced Ride Technologies division, contributing to compliance with emission norms like Bharat Stage VI [7][14] Manufacturing and Operations - Tenneco Clean Air India operates 12 manufacturing facilities across seven Indian states and one union territory, ensuring localized production for global customers [8][14] Financial Performance - In FY25, revenue decreased by 11% to Rs 4,931 crore, while profit after tax increased by 33% to Rs 553 crore, attributed to improved operational efficiency [9][14] - EBITDA was Rs 815 crore, with a margin of 16.7%, and the profit after tax margin improved to 11.3% [9][14] Market Positioning - The company is one of India's leading suppliers of emission control and powertrain solutions, benefiting from global R&D integration with its parent company, Tenneco [10][14] Use of Proceeds - As the IPO is a pure OFS, the company will not receive any funds, but listing on Indian exchanges will enhance brand visibility and provide liquidity [11][14] Valuation - At the upper end of the price band, the company commands a market capitalization of approximately Rs 16,000 crore [12][14]