# 1. Financial Performance ## A. Key Figures * **Value-Added Revenue (VAR):** ₹11,515 Mn Q2FY26 (+8.9%) · ₹23,181 Mn H1FY26 (+8.2%) * Revenue from Operations: ₹12,806 Mn Q2FY26 (+9.6%) · ₹25,663 Mn H1FY26 (+5.2%) * EBITDA: ₹2,168 Mn Q2FY26 (+5.7%, 18.8% margin) · ₹4,457 Mn H1FY26 (+6.6%, 19.2% margin) * PAT: ₹1,507 Mn Q2FY26 (+9.9%, 13.1% margin) · ₹3,188 Mn H1FY26 (+10.9%, 13.8% margin) * **Operating Cash Flow:** ₹1,122 Cr H1FY26 * Capex: INR246 million (~₹2.46 Cr) H1FY26 ## B. Revenue Growth * **Outperformance vs. Market:** Value-added revenue growth outpaced the served market (PV, CT, OH, industrial) in both Q2 and H1FY26, driven by strong domestic and export demand. * **Sustained Momentum:** Reported revenue growth remained steady, reflecting resilient business performance despite moderate sectoral expansion. ## C. Profit Margins * **Margin Resilience:** High earnings quality maintained through mix optimization and operational discipline, with PAT margin expanding **34 bps YoY** in H1. * **Export-Led Mix Benefit:** Higher-margin export orders are positively influencing product mix and contributing to margin improvement. * **Near-Term Margin Pressure:** EBITDA margins expected to be **slightly softer** in coming quarters due to incremental costs from public listing, including compliance, IT, and senior hires. * **Pass-Through Cost Structure:** Rising precious metal costs have **no impact on absolute EBITDA** as they are fully passed through to customers, though may dilute margin percentages. ## D. Balance Sheet * **Debt-Free & Capital Efficient:** Company remains fully debt-free, funding all capex and working capital from internal accruals, with industry-leading ROCE and fixed asset turnover. ## E. Cash Flow * **Negative Working Capital Cycle:** Cash conversion cycle of **-22 days** in H1FY26 underscores a capital-light operating model and strong working capital management. * **Robust Cash Generation:** Operating cash flow significantly exceeded EBITDA, reflecting efficient pre-cash flow generation and low working capital intensity. --- # 2. Order Book & Demand ## A. Key Figures * **Lifetime Order Book:** **₹9,840 Cr** (as of Sep 30, 2025) · Includes **₹1,760 Cr** export component * **Export Mix:** **7–8%** of total product exports in Q2FY26 (+ significant acceleration) ## B. Lifetime Value Bookings * **Strategic Bookings Surge:** Record lifetime order book reflects major program wins with **multi-year revenue visibility** and strong strategic positioning in key growth segments. * **White Space Penetration:** Win with Japanese OEM marks entry into **previously inaccessible market segment**, enhancing long-term growth runway. * **Demand Pull-Forward:** Commercial truck OEMs advanced volumes ahead of **AC cabin regulation**, avoiding **₹60,000–80,000 cost increase** effective July–August. ## C. Export vs Domestic Mix * **Exports Accelerating:** Export business growing at a significantly faster pace than domestic, despite low base, driven by strategic global wins. * **Domestic Demand Drivers:** Premiumization, safety, comfort, and **stricter emission norms** fueling demand for advanced clean air and powertrain solutions. * **Market Headwinds:** **Weak commercial truck demand** and **sluggish B/C/D segment PV growth** pose near-term risks, exacerbated by poor road infrastructure. --- # 3. Segment & Product Performance ## A. Key Figures * Clean Air & Powertrain Revenue: **INR5,702 million** Q2 FY26 (+3%) * **Advanced Ride Technologies Revenue:** **₹5,813 Mn** Q2 FY26 (+15.4%) * **Shock Absorber Market Share:** **52%** in India (up from 48%) ## B. Business Pillars & Strategic Positioning * **Dual Growth Engines:** Business anchored in two integrated segments—Clean Air & Powertrain and Advanced Ride Technologies—aligned with India’s premiumization and technological upgrade cycle. * **Global-Local Leverage:** Backed by Tenneco Group’s global R&D and engineering scale, enabling delivery of cutting-edge solutions with local cost and application expertise. * **Technology Transfer Advantage:** Access to pre-validated advanced technologies allows rapid deployment in India without customer-facing development risks. ## C. Segment Performance & Outlook * **Resilient Revenue Growth:** Both segments delivered low single-digit YoY growth despite commercial truck demand softness, supported by volume gains and export momentum. * **Clean Air Growth Pathway:** Slight underperformance vs. industry offset by strategic win with Japanese OEM, opening RFQ pipeline and long-term wallet share expansion potential. * **Advanced Ride Inflection Building:** Strong OEM contract wins reinforce #1 position; shift from commoditized shocks to frequency-dependent and semi-active systems is accelerating. * **EV-Driven Demand Catalyst:** Higher vehicle mass and lower CoG in EVs necessitate advanced suspensions, increasing content per vehicle and adoption urgency. * **Tipping Point Dynamics:** Near-universal OEM roadmap adoption expected as ride comfort becomes a key differentiator, with early mover advantage likely to trigger fast follower response. ## D. Market Share & Competitive Position * **Dominant #1 Positions:** Holds leadership in four key product categories, including clean air for commercial trucks and shock absorbers for passenger vehicles. * **Durable Customer Relationships:** Zero-defect manufacturing and safety excellence sustain 20-year average OEM partnerships, deepening integration across platform cycles. * **Strategic Share Gain:** Increased shock absorber market share to **52%** (CRISIL), reflecting execution strength and competitive displacement. * **White Space Opportunity:** Significant untapped potential remains in both Clean Air and Advanced Ride segments, underpinning long-term growth runway. --- # 4. Capacity & Manufacturing ## A. Capacity Expansion * **Strategic Capacity Buildout:** Production capacity to nearly double over the next 3–5 years, driven by growth in clean air and suspension systems and supported by new plant development. * **Technology-Led Capex:** Investments focused on advancing ride technologies, particularly the shift to **semi-active suspension systems**, aligned with order book visibility and long-term growth plans. * **Global Capex Reallocation:** Part of expansion funded by shifting capital expenditure from other Tenneco regions to India, leveraging the country’s **lower manufacturing costs** and **higher affordability**. ## B. Localization Roadmap * **Self-Funded Growth Model:** Future capex fully covered by **internal cash accruals**, underpinned by a standardized, modular framework and a **zero-debt balance sheet**. * **Speed-to-Market Priority:** Emphasis on rapid localization of advanced suspension technologies to maintain competitiveness and meet evolving OEM requirements. --- # 5. Export & Global Supply ## A. India Export Hub * **Strategic Export Shift:** India is transitioning from a "local for local" to a **global export hub**, driven by engineering talent, cost competitiveness, and technological parity, enabling exports of finished and semi-finished goods to Europe and beyond. * **Technology Parity as Enabler:** Clean air and advanced ride technologies developed for Indian standards (e.g., BS 2, RDE) are **technologically equivalent** to Euro 6 requirements, allowing seamless global deployment. * **Internal Consolidation Momentum:** Strong internal push to shift production from higher-cost regions to India, with potential plant rationalizations underway, supported by labor cost arbitrage and scalability. * **Future Disclosure Plans:** Management is evaluating separate reporting of export performance by Clean Air and ART segments once a critical mass of orders is achieved. ## B. Global OEM Demand * **New Market Penetration:** Secured strategic clean air business with a **leading Japanese passenger vehicle OEM**, opening a previously untapped export channel. * **Diversification-Driven Demand:** Western OEMs are actively shifting sourcing to India under **China Plus One** and post-COVID contingency strategies, accelerating export momentum. * **Broadening Product Reach:** Export demand spans **clean air, powertrain, and advanced ride technologies**, including full assemblies and subcomponents, enhancing global competitiveness. ## C. Intra-Company Shipments * **Balanced Export Growth:** Current export expansion is driven **equally by third-party OEM orders and intra-company shipments** to support other Tenneco regions, signaling integrated global supply chain integration. --- # 6. Technology & Regulatory Risks ## A. New Labor Code Impact * **Headline:** New labor code regulations introduce uncertainty, with Tenneco and peers still evaluating potential industry-wide cost and compliance impacts. ## B. Technology Adoption Pace * **Headline:** Suspension technology disruption is accelerating, driven by overseas benchmarking revealing competitive advanced systems at affordable price points. * **Headline:** Industry shift underway from conventional shock absorbers to **frequency-dependent damping** and **semi-active suspension systems**. --- # 7. Guidance & Outlook ## A. Margin Recovery Path * **Margin Rebound in Sight:** EBITDA margins expected to recover to prior levels as revenue growth absorbs incremental listed company costs, with cost impact turning relatively flattish in coming quarters. * **Structural Tailwinds:** Limited supplier availability for advanced electronic controls and systems integration creates pricing leverage, supporting margin expansion. * **Demand Acceleration:** Immediate customer demand for advanced technologies—driven by OEM survival needs—enables faster adoption and **shorter time-to-revenue**, boosting margin trajectory. ## B. TREM 5 Catalyst * **Regulatory Inflection Point:** TREM 5 norms for tractors, expected around **FY27 (2027)**, represent a major growth catalyst for clean air business. * **Technology Leadership & Share Gains:** Strong oxycat and particulate filter capabilities position Tenneco to win share by meeting affordability and weight reduction demands during regulatory shifts. * **Embedded in Growth Pipeline:** TREM 5 already reflected in current order book, with additional bookings anticipated post-September 25th, enabling faster time to market and **significant content uplift**. ## C. Long-Term Growth Pillars * **Export Momentum Building:** Export contracts entail 12–18 month validation cycles, with meaningful revenue contribution expected from late FY26 through FY28. * **Core Growth Engines:** Confidence anchored in market share gains, new OEM tech adoption, and export expansion as sustainable growth pillars. * **Optionality from Future Regulations:** Potential early rollouts of **CAFE norms** or **BS7 standards** could drive higher content per vehicle and accelerate growth. * **Visibility Roadmap:** While RFQ disclosures are limited by confidentiality, the company will provide **semi-annual order book updates** to signal traction in disruptive technologies. * **Long-Term Lens Advised:** Due to long sales cycles and timing volatility, single-quarter results may not reflect underlying momentum—strategic view preferred.