Shares of Tenneco Clean Air India Ltd. experienced a significant surge of approximately 5% in Tuesday's trading session. This uplift followed Motilal Oswal Financial Services initiating coverage on the auto component manufacturer with a 'Buy' rating, highlighting the company's robust market standing and multiple catalysts for future growth.
The stock commenced trading at Rs 516.60 per share, up from its previous close of Rs 505.95. Throughout the session, it reached a high of Rs 532.25, marking an increase of about 5.20% over the prior closing price.
Motilal Oswal emphasized Tenneco Clean Air's dominant positions across its core businesses. The company commands an impressive 58% market share in commercial vehicle Clean Air systems, 68% in off-highway Clean Air (excluding tractors), 20% in passenger vehicle Clean Air, and 55% in passenger vehicle shock absorbers and struts. These leadership roles are underpinned by strong relationships with Original Equipment Manufacturers (OEMs), access to Tenneco's advanced global technology and research capabilities, and substantial entry barriers within the industry.
Driving Growth in Auto Components
According to Motilal Oswal, several factors are poised to fuel Tenneco Clean Air's next phase of expansion. These include a growing trend towards premiumisation in the automotive sector, the implementation of more stringent emission norms such as BS VII, CAFE III, and TREM V, increased localisation of advanced technologies, new customer programs, and India's emerging stature as a global export hub for auto components.
The brokerage anticipates the company's suspension business will achieve a compounded annual growth rate (CAGR) of around 20% between FY26 and FY29. This growth is expected to be driven by the increasing adoption of semi-active suspension systems, continued premiumisation, rising exports, and a larger share of business. Products like DaVinci and CVSAe are identified as key opportunities aligning with India's premium vehicle trends.
Furthermore, Motilal Oswal projects that Tenneco Clean Air's Clean Air and Powertrain revenue will grow at approximately 17% CAGR over the FY26-FY29 period. This projection is strongly supported by a substantial order book, valued at Rs 12,400 crore as of March 2026, which provides more than 100% coverage of its revenue targets for FY28.
Financial Strength and Future Projections
The financial services firm also presented an optimistic earnings outlook, forecasting consolidated earnings to grow at a 19% CAGR between FY26 and FY29. Profit After Tax (PAT) is expected to reach Rs 1,026 crore by FY29, a significant rise from Rs 630 crore in FY26.
Motilal Oswal underscored Tenneco Clean Air's robust financial health, citing its net cash position, a negative working capital cycle, core Return on Capital Employed (RoCE) exceeding 90%, and strong cash flow conversion. These attributes are seen as critical enablers for the company's ambitious growth strategies.
The brokerage initiated its 'Buy' rating with a target price of Rs 673, valuing the stock at 30 times its September 2028 estimated earnings. Based on a reference price of Rs 506, this target implies a significant upside potential of approximately 33% for investors.