The Corner Office Interaction with the Mr. Arvind Chandrasekharan WTD & CEO of Tenneco Clean Air India Limited by Motilal Oswal Financial Services Ltd
Technology at Core, Growth at Scale!
We met with Mr. Arvind Chandrasekharan, WTD and CEO of Tenneco Clean Air India, to gain insights into the company's future growth plans and other strategic developments. The key takeaways from our discussion are outlined below.
* DaVinci DCx, commercialized with Mahindra in February 2026, has seen adoption in the XUV 7XO and Thar OG, validating its potential as a differentiated suspension technology for Indian PVs. Delivering ~85–90% of semi-active suspension comfort at ~2x the cost of passive suspension and a fraction of CVSAe’s cost and complexity, DaVinci offers OEMs an attractive balance of ride quality and affordability. The DCx 32 variant further expands its addressable market into smaller vehicles, although we expect mediumterm adoption to be concentrated in models priced above INR1.0m. TENNIND expects wider adoption across Mahindra’s portfolio in FY27, followed by Tata Motors from FY28E onwards, with additional PV OEMs (from whom it is already receiving inquiries) providing further growth opportunities.
* The next regulatory cycle, led by BS-VII emission norms and CAFE III fuelefficiency requirements, should drive higher Clean Air content per vehicle (CPV) by ~1.3x, through two distinct mechanisms. BS-VII could require more sophisticated exhaust after-treatment systems, including larger particulate filters, advanced SCR systems, and optimized emission-control technologies, to meet tighter NOx and particulate-matter limits. Separately, CAFE III is likely to accelerate the adoption of gasoline direct injection (GDI) engines, which improve fuel efficiency and reduce CO? emissions but generate higher particulate emissions than conventional port-fuel-injection engines, increasing the need for gasoline particulate filters (GPFs). With TENNIND technologically prepared for Euro-VII requirements, these regulatory changes offer an opportunity to increase content per vehicle and partly offset the impact of declining ICE volumes. However, the final BS-VII requirements are yet to be notified, and the eventual CPV increase will depend on the regulations and OEM adoption.
* TENNIND is emerging as a strategic export and manufacturing hub within the global Tenneco network, leveraging India's cost competitiveness, engineering capabilities, and global quality manufacturing standards. Tenneco is targeting export opportunities across Clean Air, Powertrain and ART, including direct OEM business and intra-group sourcing. The maiden order from a European ATV manufacturer and the heat-shield order from Tenneco America in 1QFY27 demonstrate the breadth of this opportunity. Management expects export growth to accelerate from FY27–28, with the larger ramp-up expected around FY28–29. Export margins are currently at least in line with, and in some cases better than, domestic margins.
* We reiterate BUY on the stock with a TP of INR673 based on 30x Sep’28E earnings
Valuation and view
* TENNIND enters its next phase of growth from a position of strength, commanding ~58% share in CV Clean Air, ~68% in off-highway Clean Air (ex-tractors), ~20% in PV Clean Air, and ~55% in PV shock absorbers and struts. These leadership positions, backed by deep OEM relationships and TENNIND’s global technology and R&D, create strong entry barriers. We see multiple growth levers ahead as premiumization raises suspension content, while BS-VII, CAFE III, and TREM-V drive higher Clean Air content across PVs, CVs, and off-highway applications. Localization of advanced technologies, new customer programs, and India’s emergence as an export hub should further support market- and wallet-share gains. We estimate a 19% earnings CAGR for the consolidated business (FY26-29).
* With a capital-efficient model and strong balance sheet, TENNIND is well placed to pursue growth while sustaining healthy returns (order book stands at INR124b). Its net cash position, negative working capital cycle, 90%+ core RoCE, and strong cash conversion (70%+ CFO/EBITDA; 80%+ FCF/PAT) provide resilience and support expansion into new segments. At the CMP of INR448, the stock trades at 27.8x/23.2x FY28E/29E EPS. We reiterate our BUY rating on the stock with a TP of INR673, based on 30x Sep’28E earnings.
* Key risks:
1) Faster EV adoption
2) termination of the technology license or PE exit overhang
3) intensifying competition
4) commodity fluctuations
5) loss of key customers.
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