Tenneco Clean Q4 FY26 Earnings Call — Analysis (NSE: TENNIND)
Tenneco Clean Air India delivers record FY26 with 18.8% EBITDA margin, INR124 Bn order book, and strategic OEM wins, positioning for double-digit growth.
The take
FY26 Revenue from Operations ₹5,404.0 Cr ( +10.5% YoY ) , Q4FY26 +17.1% . New guidance — FY2027 ebitda margin stability stable . New story: Record EBITDA margin driven by P3 operating mod… .
Results
Q4FY26: Revenue from operations ₹1,552.4 Cr (+17.1% YoY), VAR ₹1,405.8 Cr (+17.5% YoY), EBITDA margin 18.3%, PAT ₹166.8 Cr (+18.8% YoY).
Financial highlights
| Metric | Value | Change | Basis |
|---|---|---|---|
| Revenue from Operations | ₹1,552.4 Cr | +17.1% | yoy · Q4FY26 |
| Value Added Revenue (VAR) | ₹1,405.8 Cr | +17.5% | yoy · Q4FY26 |
| EBITDA | ₹257.3 Cr | +17.6% | yoy · Q4FY26 |
| EBITDA Margin | 18.3% | yoy · Q4FY26 · stable vs prior year | |
| Profit After Tax | ₹166.8 Cr | +18.8% | yoy · Q4FY26 |
| Revenue from Operations | ₹5,404.0 Cr | +10.5% | yoy · FY26 |
| Value Added Revenue (VAR) | ₹4,918.0 Cr | +12.3% | yoy · FY26 |
| EBITDA | ₹925.5 Cr | +13.5% | yoy · FY26 |
| EBITDA Margin | 18.8% | +450bps | none · FY26 · vs FY24 (14.3%) |
| Profit After Tax | ₹604.4 Cr | +9.3% | yoy · FY26 |
| ROCE | 94% | +37pp | yoy · FY26 · FY25: 57% |
| Lifetime Order Book | ₹12,400 Cr | point_in_time · Mar-26 · as of Mar 31, 2026 | |
| Announced Capex for New Plants | ~₹140 Cr | point_in_time · FY26-FY27 · announced in Q3 & Q4 FY26 |
Guidance
Lifetime order book of ₹12,400 Cr provides full visibility of FY28 internal revenue target; double-digit medium-term growth expected.
What management committed to
- [Tenneco Clean Air India's] lifetime order book of INR124,000 million provides 100% visibility of [the company's] FY 2028 internal revenue target and underpins a double-digit growth trajectory over the medium term. — FY2028
- [Tenneco Clean Air India] expects EBITDA margins to remain stable going forward, supported by the P3 operating model and commercial recoveries. — stable, FY2027
- [Tenneco Clean Air India's] export revenue will ramp up to reach critical mass around 2028, driven by a strong export order book that is 14-20% of total order book. — FY2028
- [Tenneco Clean Air India] is targeting to make DaVinci DCx suspension standard across mid-to-premium SUV segments, capturing approximately 50% of the 5-5.5 million India passenger vehicle market over the next 3 to 5 years. — 50% of India PV market, FY2029-FY2031
- Two new greenfield plants (Clean Air in North India, Advanced Ride Technologies in West India) with total announced capex of approximately INR1,400 million will be commissioned in 6-12 months, contributing steady-state revenue with a capex-to-revenue ratio of 1:3, with peak revenue by mid-FY28 to FY29. — peak mid-28 to 29, FY2028-FY2029
- [Tenneco Clean Air India] will see Clean Air revenue growth accelerate from late FY27/FY28 onwards following [the company's] entry into the supplier panel of the leading Japanese passenger vehicle OEM in India for Gasoline Particulate Filter, with equal or better margins. — FY2028
Key themes
Record profitability, order book-led capacity expansion, and technology-driven growth.
How the narrative shifted
- Record EBITDA margin driven by P3 operating model: Management attributes the 18.8% record margin to P3-driven efficiencies, better cost absorption, and disciplined commercial recoveries.
- Order book provides FY28 revenue visibility: INR124bn lifetime order book covers 100% of internal FY28 revenue target, underpinning double-digit medium-term growth.
- Exports emerging as growth accelerator: Technology equalization, China+1 diversification, and cost arbitrage are driving an export order book that is 14-20% of total; exports will ramp significantly by 2028.
- DaVinci DCx disrupts suspension market: Patented mechanical shim-stack suspension gaining OEM traction as an affordable ride-quality differentiator; targeting 50% of India's PV segment.
- CAFE 3 and BS7 regulatory tailwinds: Stricter emission norms will add ₹1,300-1,400 Cr of addressable content in aftertreatment, benefiting Clean Air business.
- Capacity expansion to capture volume and technology growth: Two new plants being set up to support demand from market growth and new technology adoption, with disciplined capex.
- Deepening OEM relationships and technology leadership: Wins with Japanese PV OEM for Clean Air and bearings, and Euro 7 proof-of-concept strengthen competitive moat and open new segments.
- Balance-sheet strength and capital efficiency: Zero-debt, 94% ROCE, negative cash conversion cycle provide financial flexibility to fund growth.
Operational commentary
- DaVinci DCx, world's first advanced mechanical suspension using shim stacks, adopted by a leading Indian OEM for a flagship SUV; scope expanded with multiple new applications across other OEMs (Indian, Japanese, Korean, European).
- Clean Air & Powertrain won a significant Clean Air program and achieved strategic entry into bearings systems with a leading Japanese passenger vehicle OEM, marking entry into a previously untapped segment.
- Earlier in FY26, breakthrough win for Clean Air with leading Japanese PV OEM for Gasoline Particulate Filter, unlocking substantial growth from late FY27 onward.
- Completed proof-of-concept with a leading European truck OEM for Euro 7 compliant Clean Air solution, strengthening advanced emissions capability and export hub positioning.
- Lifetime order book reached ₹12,400 Cr as of Mar 31, 2026, with exports at 14-20%, providing 100% visibility of FY28 internal revenue target.
- Announced two greenfield capacity expansions: Clean Air plant in North India and Advanced Ride Technologies plant in West India, total capex ~₹140 Cr, to meet volume and technology growth.
- Exports poised to ramp significantly, with critical mass expected around FY28, supported by technology equalization, China+1 diversification, and labour cost arbitrage.
Analyst Q&A
Q. How will exports pan out over the next 2-3 years in terms of ramp-up and mix?
Exports will ramp up with critical mass around 2028; the export order book is 14-20% of total and is coming in strong on both Clean Air and ART.
Q. What is the timeline for new plant commissioning and when do new orders start?
Plants will take 6 months to a year to commission; peak volumes are expected mid-28 to '29. Bearings entry is strategic, capacity evaluation ongoing.
Q. Are other OEMs approaching for DaVinci DCx faster than anticipated, and what is the adoption potential?
Three to four OEMs (Indian, Japanese, Korean, European) are interested. We are targeting 50% of the PV market over 3-5 years.
Q. How does CAFE 3 change content per vehicle for aftertreatment?
CAFE 3 drives gas direct injection, GPF addition; content could increase 1.3-1.5X, addressing an incremental addressable market of ₹300-400 Cr.
Q. How are currency depreciation contracts structured for exports?
Direct material has escalators; indirect costs are bundled and recovered commercially. Depreciation makes our products more competitive overall.
Research and educational content only. Not investment advice.