Tenneco Clean Air India Limited IPO – What Investors Should Know
India’s IPO market has gathered momentum once again, and one of the marquee issues in line is Tenneco Clean Air India (TCAI). The company, a subsidiary of the U.S. headquartered Tenneco Inc. (itself backed via PE firm Apollo Global Management), is planning a significant public offering in India, and it warrants a detailed look for investors.
Company overview:
Tenneco Clean Air India is part of the Tenneco Group, a global Tier-1 automotive component supplier.
The company’s Indian operations date back to 1979 with its first manufacturing facility in Parwanoo, Himachal Pradesh.
It manufactures and supplies clean-air systems, powertrain and suspension solutions, catering to domestic OEMs as well as exports.
TCAI claims significant market share in some segments: for example, a 60 % share in clean-air systems for Indian commercial truck OEMs and 42 % share in off-highway vehicle excluding tractors OEMs.
It serves a wide base of customers: in FY25 it reported servicing 119 customers, including the top 7 passenger-vehicle OEMs in India and the top 5 commercial-truck OEMs.
IPO structure and size:
The IPO is proposed to raise up to ₹3,000 crore (US$350 million) via an Offer‐for‐Sale (OFS) route. No fresh shares are being issued; all proceeds go to the selling shareholder promoter.
The selling shareholder is Tenneco Mauritius Holdings Limited part of the promoter group.
The company will be listed on both the National Stock Exchange of India (NSE) and the Bombay Stock Exchange (BSE).
Lead-managers: JM Financial, Citigroup Global Markets India, Axis Capital and HSBC Securities & Capital Markets (India).
Recent financials & business performance:
For FY25: Net Profit ₹553.1 crore, up 32.7% year-on-year. Revenue declined 10.6% to ₹4,890.4 crore.
The drop in revenue is a notable risk; profitability is improving, but the revenue decline indicates headwinds.
The company has 12 manufacturing plants in India.
Strengths & investment thesis:
Leadership position in key clean-air systems and components for commercial vehicles/off-highway vehicles in India. This gives the company a strong niche in a segment expected to grow with regulation and environmental standards tightening.
Technology-intensive business: The clean air / powertrain / suspension business has higher technical entry barriers vs commodity components.
Global parent and scale: Being part of the Tenneco Group gives access to global technology, R&D, big OEM relationships.
Structural tailwinds: India’s automotive industry is evolving emissions norms, electrification, after-treatment systems which should benefit players like TCAI.
Risks & things to watch:
Since the IPO is an OFS and the company is not raising fresh capital, the listed entity won’t receive the proceeds. That limits how much value creation flows directly into the business from the IPO.
The revenue decline in FY25 raises concerns: while profit is up, the drop in topline may reflect cyclical weakness, commodity cost pressures, or OEM ordering patterns.
Client / OEM concentration risk: While the company serves many OEMs, heavy reliance on a few large customers is typical in this sector and can pose risk if one major OEM shifts sourcing.
Competitive and technology risk: As emissions norms become stricter and electrification increases, parts of powertrain business may become under pressure, and companies must adapt.
Valuation risk: With a marquee IPO and strong demand in the market, there’s a risk of a high listing premium or elevated expectations, which may compress future returns if business doesn’t deliver accordingly.
Why this IPO matters?
For the Indian IPO market: TCAI is one of the larger issues in the pipeline ₹3,000 crore and signals demand and confidence in manufacturing auto component space.
For the auto components industry: Listing of a technology-intensive, export oriented component manufacturer gives visibility into this sector’s growth and may draw attention to other similar companies.
For investors: It offers a way to participate in the growth of clean-air and emission-control components in India, which is aligned with regulatory / industry trends.
Key things investors should check before applying:
Final issue price band, lot size, and subscription terms these were still to be finalised in DRHP filings.
Grey Market Premium (GMP) and investor sentiment ahead of listing early reports suggest strong interest.
Business outlook: Given the revenue decline, how management will articulate recovery / growth strategy and how export vs domestic business will balance.
Impact of EV transition: While clean-air and internal-combustion powertrain components have tailwinds today, long-term trends toward EVs could change the business mix, so the company’s strategy for future propulsion systems will matter.
Post-listing share-performance expectations: With an OFS, the share price will largely reflect market sentiment and less the capital-raising benefit to the business; investors should consider whether they are paying for listing hype or sustainable value.
Conclusion
Tenneco Clean Air India’s upcoming IPO presents an interesting opportunity: a strong niche player in a growing industry segment, with global backing and market leadership in key areas. However, the fact that it is purely an Offer-for-Sale, combined with recent revenue weakness and sector‐transition risks, means investors should proceed with caution and clarity. As always, read the final prospectus carefully, assess valuation and business strategy, and ensure the investment aligns with your risk tolerance and time horizon.
Note: This article is for informational purposes only and should not be construed as investment advice. Investors are encouraged to conduct their own research or consult a qualified financial advisor before making any investment decisions.
Team- Credit Money Finance
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