Tenneco Clean Air India Ltd (TENNIND) Q1 FY27 Earnings Call: Guides Rs. 350-450 Cr Capex, Revenue Grows 20% YoY

Tenneco Clean Air India Ltd held its Q1 FY27 earnings call on August 05, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Headline Financials & Growth Drivers

• Revenue from operations grew 20.2% YoY to Rs.15,448 million in Q1 FY 2026-2027, with value-added revenue (VAR) up 18.4% to Rs.13,816 million, driven by higher volumes, new programs, content per vehicle, and market share gains.
• EBITDA rose 7.9% YoY to Rs.2,469 million; EBITDA margin of 17.9% of VAR was impacted by commodity inflation, rupee depreciation, supply chain disruptions, and public listing costs, partly offset by customer recoveries and productivity (net 60 bps reflected).
• Profit after tax stood at Rs.1,652 million (12% of VAR); management noted that excluding a one-time benefit from the motorcare business sale in the prior year, PAT growth was in line with EBITDA growth.
• Advanced Ride Technologies (ART) VAR grew 27.9% YoY to Rs.7,190 million, outpacing Clean Air & Power Train Solutions VAR which grew 9.6% YoY to Rs.6,626 million, supported by advanced suspension adoption and DCX platform expansion.
• Annualized ROC remained strong; management highlighted ongoing capacity expansion investments to support the order book over the coming year (FY 2027-2028), and continued governance/compliance enhancements.

Share Gains, Deal Wins & Export Mix

• Commercial vehicle clean air market share improved from 57% to 58% in FY 2025-2026; passenger vehicle shock absorbers and struts share expanded from 52% to 55%; off-highway clean air maintained 68% market share.
• Darwin DCX holds 55% market share in suspension; the platform secured four new customers in Q1 FY 2026-2027, and the new DCX 32 variant (32mm piston) was introduced to target smaller A and B segment vehicles.
• Notable Q1 program wins included a spark plug order from a large Indian PV OEM, a passenger vehicle exhaust program, a cold end assembly for a global OEM CNG platform, and an emissions aftertreatment program for a leading domestic CV manufacturer.
• Export order book split 70% internal (Tenneco-to-Tenneco) and 30% third-party OEMs as of Q1 FY 2026-2027; export revenues constituted slightly over 7% of total revenue (up from 5% pre-IPO), with the export order book share at 14-20% of total.
• Export wins in Q1 included a maiden order from a leading European all-terrain vehicle manufacturer for advanced ride technologies, and a heat shield order from Tenneco America for the powertrain business.
• Order book reporting will be semi-annual (next update at H1 FY 2026-2027 end); management declined to provide a specific numeric interim update but noted continued strong new-business wins.

Darwin DCX, Da Vinci & Regulatory Tailwinds

• Darwin DCX targets a vehicle price range of Rs.3 lakh to Rs.35 lakh, aiming to disrupt conventional suspension; management noted that 90% of vehicles in India still use passive suspension (industry context), and semi-active suspension is targeted for vehicles above Rs.35 lakh and EVs.
• Da Vinci frequency-dependent damping is positioned as a "disruptive" technology with potential to address over half the market; the plug-and-play replacement has a cost delta of "a few percentage points," making it affordable for OEMs to scale up quickly.
• BS7 and CAFE3 norms are expected to increase content per vehicle 1.3-1.5X (30-50%) when implemented, a smaller increment than the 2-4X jump from BS4 to BS6, subject to final legislation.
• Technology readiness confirmed for Euro 7 (proven with a leading European truck manufacturer), future BS7 norms in India, and US equivalent norms for 2030.
• EV players already drive demand for Darwin or electronic suspension due to lower center of gravity, increasing content per vehicle; management noted internal discussions on developing more agnostic products that work on both ICE and EV platforms, with no specific timeline provided.
• Management's aspiration is to put the entirety of India's A and B segments on Darwin as a minimum; commercial production for smaller passenger vehicles is pending customer demand following the recent technology development.
• New products planned for FY 2026-2027 (through March 2027) across Darwin semi-active and clean air businesses, expected to contribute incrementally between FY 2027-2028 and FY 2029-2030.

Margin Bridge, Commodity Impact & Royalty

• EBITDA margin (value-added) declined 170 bps YoY and 43 bps QoQ in Q1 FY 2026-2027, attributed by management to transition costs from private-to-public company and the impact of the Middle East conflict on non-indexed commodity costs (crude oil, LPG, CNG, plastics, rubber).
• Steel is fully pass-through via back-to-back covers; non-indexed commodities (rubber, plastics, crude oil, LPG, CNG, argon gas) show partial recovery of cost increases in Q1 FY 2026-2027.
• Royalty remains at 2.5% of overall revenue (net of intercompany sales), consistent with prior years.
• Capacity utilization: CAPT segment >80% and Advanced Ride Technologies (ART) segment >90% in Q1 FY 2026-2027; management attributed the rise partly to GST spurring demand for smaller (AB segment) vehicles, creating supply-side pressure across suppliers.
• Export margins are either in line with or better than domestic margins, but management declined to disclose specific program-level margins.
• Headwinds to exports include U.S. tariffs under Section 232 on exhaust parts and macroeconomic conditions in Europe and the Americas.

Investment Plans & Capital Allocation

• Capex guidance for FY 2026-2027 is Rs.350-450 crores, allocated to both Clean Air and ART segments, including Rs.140 crores for two new plants already announced; a separate new ART plant in western India involves an investment of Rs.70 crores (period unspecified).
• Company generates 50-60% of EBITDA as cash; management plans to fund the entire capex for FY 2026-2027 through internal accruals, remaining debt-free.
• Additional free cash is being considered for M&A and inorganic opportunities, with management noting ongoing evaluation of potential targets.
• Q1 FY 2026-2027 actual capex will be disclosed in Q2 results; the company was not affected by the Hyundai supply disruption in Q1 FY 2026-2027 due to limited exposure to that customer.

Outlook, Pipeline & Macro Headwinds

• Demand from Indian OEMs remains strong through at least Q2 FY 2026-2027, with management expecting margin seasonality to follow prior-year patterns; the Middle East war poses a risk to this outlook.
• Clean Air business grew 9.6% in Q1 versus management's estimated apples-to-apples served addressable market growth of ~8-10%, implying slight outperformance; the narrower SAM reflects subtraction of ~3-3.5% for EVs and a major Japanese PV OEM where Tenneco has no presence.
• Strategic entry into a white-space PV OEM via CAFE 3 norms is expected around FY 2028-2029 (engine launch), which should boost passenger vehicle market share.
• New product launches in FY 2026-2027 (Darwin semi-active, clean air) are expected to contribute incrementally between FY 2027-2028 and FY 2029-2030; the company's growth outperformed the industry by ~16% in Q1 driven by new products.
• Key risks include the Middle East conflict impacting non-indexed commodity costs, US tariffs under Section 232 on exhaust parts, and macroeconomic conditions in Europe and the Americas affecting export demand.
• Management confirmed no formal numeric guidance for the current period; the next order book update will be provided at H1 FY 2026-2027 end.