Tenneco Clean Air India Ltd (TENNIND) Q2 FY27 Earnings Call: Rs. 16,500 Cr Order Book Covers FY30, Export Share Dips Sharply

Tenneco Clean Air India Ltd held its Q2 FY27 earnings call on November 04, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Strong Topline, Softer Profitability on Commodity and Currency Headwinds

• Q2 FY27 revenue from operations grew 34.2% YoY to Rs.17,183 million — value-added revenue grew 32.2% YoY to Rs.15,229 million; H1 FY27 revenue stood at Rs.32,631 million (+27.2% YoY) with VAR of Rs.29,044 million (+25.3% YoY).
• Q2 FY27 EBITDA rose 20.7% YoY to Rs.2,616 million (17.2% of VAR) — H1 FY27 EBITDA rose 14.1% YoY to Rs.5,085 million (17.5% of VAR), trailing topline growth.
• Q2 FY27 PAT was Rs.1,734 million (+15% YoY) — H1 FY27 PAT of Rs.3,386 million (+6.2% YoY) trailed EBITDA due to a one-time interest income benefit of ~Rs.254 million net of tax from the sale of the motor care entity recognized in H1 FY 2025-2026; excluding this one-off, H1 PAT growth would have been in line with EBITDA growth.
• Headwinds were broad-based — commodity costs from the geopolitical environment, minimum wage increases in a couple of states, a weakening currency, premium freight, and public-listed-company costs, partially offset by commercial recoveries, productivity, and cost discipline.
• Balance sheet remains debt-free with net cash — cash conversion cycle of negative 22 days funds capex and growth through internal accruals.
• Segment split favored ART — Clean Air & Powertrain Q2 VAR of Rs.7,218 million (+26.6% YoY); Advanced Ride Technologies Q2 VAR of Rs.8,010 million (+37.8% YoY) on strong volumes, program ramp-ups, and export execution.

Lifetime Book Covers FY30 Revenue; Export Share Dips Sharply

• Lifetime order book stood at ~Rs.165,000 million at end of H1 FY27 — more than 100% coverage of the FY 2029-2030 revenue target (single-year FY30 revenue, not cumulative); exports account for Rs.8,750 million of the book, providing 50% coverage of the FY 2030 export revenue target.
• Export mix fell to ~5-6% of the total order book (~Rs.800 crore on a ~Rs.15,000 crore base) in Q2 FY27 — versus 14-20% of the Rs.12,400 crore book at end of FY 2025-2026; management confirmed the decline and called it a one-quarter dip.
• Causes cited by CEO Arvind Chadha — soft Western OEM demand (Germany, France, UK, US) on GDP contraction, Chinese vehicle exports into those regions, US tariff uncertainty including the Trump administration's mid-September (FY 2026-2027) threat of a 100% tariff on India for buying Russian oil, rising oil and freight costs, higher Western EV adoption, and delayed or cancelled SOPs.
• Domestic order book is running "way in excess" of expectations — which mechanically dilutes the export share of the total; management is hoping the US midterm election results deliver tariff removal and normalization of oil and freight costs, but gave no quantified export recovery target.
• Q2 FY27 ART wins spanned geographies and segments — content on 3 new platforms with a leading Indo-Chinese JV, first three-wheeler entry via a suspension award from a leading Indo-Korean JV, 2 next-generation model wins with an existing Japanese PV OEM, and 3 new platforms with a Vietnamese OEM.
• Clean air & powertrain wins diversified the mix — a hot-end CV exhaust program with a leading Indian CV OEM for bus applications, CNG market entry via a cold-end assembly for a European PV application, and a new spark plug award from a European PV manufacturer.
• Management stated growth is not dependent on any single product, customer, or end market — and explicitly wants to win more business with Chinese OEMs setting up shop in India.

Suspension Share Climbs to ~55%; DaVinci Supply-Constrained

• 4W suspension market share rose from 48% ~18 months ago (≈FY 2025-2026) to ~55% in Q2 FY27 — per the Crystal Research report, PV shock absorber/strut share was ~50% as of H1 FY27; management noted more than one out of two cars and SUVs in India carries a Tenneco shock absorber, with white space still being pursued.
• DaVinci demand currently exceeds supply — the company is creating capacity at Hosur (the pillar plant housing the ART engineering center), including bringing the piston line in-house with localization and automation, with a gestation period expected; legacy commodity lines from Hosur/Bangalore will move to the new West India plant.
• DaVinci delta cost is a few thousand rupees on an Rs.11 lakh car — which management called a "no-brainer" for OEMs, delivering 80% of the comfort benefit per the CEO; replacement adoption is expected to grow as customer comfort builds.
• Production commenced on 3 DaVinci suspension programs in Q2 FY27 — the company supplied India's first locally produced semi-active CBSAE, which management called a key milestone in its localization journey.
• Mix shift runway remains long — 90% of the Indian market still runs on conventional suspension; Mahindra has decided it no longer wants conventional suspension; the smaller-diameter damper (announced in Q1 FY 2026-2027) extends DaVinci to A-segment vehicles down to Rs.5-6 lakh MSRP.
• Suspension order inflow and revenue growth ran upwards of 30% in H1 FY 2026-2027 — but EBITDA growth ex cleaner solutions was only ~10% YoY in H1 FY 2026-2027, reflecting the margin pressure discussed below.
• At Maruti Toyota the company has a very high share of business — management could not specify launch timing but said DaVinci introduction "will happen at some point."

Subsidiary Compression to 11.6%; Non-Indexed Recovery Still in Negotiation

• Subsidiary margins compressed from 14% to 11.6% in Q2 FY 2026-2027 — CFO Mahendra Chhabra attributed this to inflationary headwinds from the Middle East situation raising steel and non-steel commodity prices (lube oil, plastic, rubber), plus a forex impact.
• Steel increases are recovered from OEMs under pass-through arrangements with roughly a one-quarter lag — non-steel items are non-indexed and recovery depends on negotiations; the CFO confirmed the non-indexed proportion is higher in some subsidiaries.
• Part of the non-indexed inflation has been recovered — discussions with customers are ongoing and recovered amounts will flow into the P&L as and when achieved; management explicitly declined to commit a timeline for margins returning to previous levels (period unspecified).
• Oil is a specific ART headwind — ~330 ml of oil goes into one damper and 1.2 liters into all four suspension systems per vehicle; oil is non-indexed, so the benefit reaches the P&L only upon OEM confirmation.
• The standalone business shows no comparable margin pressure — its main input is steel, an indexed commodity, with increases already passed on to customers.
• On dividends, CEO Arvind Chadha said a policy is available on the website and a decision will be taken "at the right time" — no amount or timing was committed for FY 2026-2027; capital allocation priority is investing behind growth (three plants announced) alongside evaluation of other opportunities.

Three New Plants in Calendar 2027; Hot-End at 99% Utilization

• Three new facilities all have SOP timelines in calendar 2027 per the CFO — North India clean air plant ~March 2027 (Q4 FY 2026-2027), ART suspension plant in West India ~July 2027 (Q2 FY 2027-2028), and the additional West India clean air plant ~September 2027 (Q2 FY 2027-2028); CEO cautioned dates are approximate (± a couple of months) depending on customer volumes.
• North India plant adds ~10% capacity (hot and cold end, CEO's eyeball estimate) — the West India clean air plant adds another ~12-14%, more hot-end focused, which management said improves margin mix; hot end delivers a significantly better profit delta than cold end.
• Hot-end capacity is operating at 99% utilization (Q2 FY 2026-2027) — management said it will not be bottlenecked and sees no mix deterioration toward cold end.
• New West India clean air plant carries a ~Rs.45 crore investment — adding ~300k systems on top of the existing ~2 million base (completion period unspecified), serving West India customers such as Tata and Mahindra; management expects the plant to fill up quickly.
• FY27 capex guidance of Rs.350-450 crore — ~Rs.120 crore invested as at September (FY 2026-2027); management expects to be on track to meet the guided numbers.
• Suspension expansion of 2.1 million front strut and rear shock absorber capacity is unchanged — two phases, one in FY 2026-2027 and one in FY 2027-2028 (~1 million each, per the CEO), adding ~2 million to the ~19 million base, with full annualized benefit about a year after each addition.
• Capital efficiency is a stated differentiator — ROCE of 94% as of March 31, 2026 (FY 2025-2026 year-end), fixed asset turnover of 3-4x revenue on gross block (upwards of 8-9x cited by the CEO), and assets bought at fair value from sister divisions in Europe and the US as their volumes decline.

Double-Digit Growth Conviction Through FY30; Euro 7/BS7 Readiness

• Management expressed strong conviction of "nice, healthy double-digit growth" through FY30 (FY 2029-2030) — the pre-IPO-planned FY30 revenue is comfortably covered by the order book; by FY 2027-2028, it expects it may be able to indicate FY31 (FY 2030-2031) coverage, initially at a lower percentage given long sales-cycle lead time.
• Clean air & powertrain volumes grew 18+% in Q2 FY27 vs. industry production growth (ex-EV, ex-Maruti) of ~13.3% — share gains cited at Tata, Volvo and Ashok Leyland; management expects growth to continue in domestic and export markets but declined to forecast a specific rate.
• Maruti presence is expected in 2029 — management reiterated this timing, consistent with earlier quarter press releases; the company is currently not present there.
• A successful Euro 7 proof-of-concept was completed at a leading Western truck OEM in Europe — the company states it is Euro 7 ready ahead of the recently announced BS7 norms: passenger vehicles 2029, light commercial vehicles 2030, heavy commercial vehicles 2031.
• Management noted many OEMs want to source future exhaust systems from India as electrification advances — while ICE (petrol, diesel, CNG, biodiesel, ethanol) will continue for a very long time; Western OEMs under margin pressure are demanding business be moved to India over time.
• Off-highway customers said they would delay or cancel specific model production and revive it in FY 2027-2028 — the CEO clarified cancellations ultimately sit with third-party OEMs, as Tenneco is a tier-1 supplier.
• H2 FY27 outlook is supported by the order book, customer wins, technology-led growth, export opportunities, and capacity investment — with inflationary pressures to be addressed through productivity, commercial discipline, and execution under the P3 (people, performance, pride) framework.