Tenneco Clean Air India Ltd (TENNIND) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day and welcome to the Q2 and H1 FY27 earnings conference call of Tenneco Clean Air India Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the business update concludes. Should you need assistance during the call, please signal an operator by pressing star followed by zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Rupali Singh, General Counsel and Company Secretary of Tenneco Clean Air India Limited. Thank you, and over to you, Ms. Rupali.
Rupali Singh (Tenneco Clean Air India Ltd): Thank you, Ikram. Good evening, ladies and gentlemen, and a warm welcome. Today from management side we have with us, Mr. Arvind Chandra, Whole-Time Director and CEO, Mr. Mahendra Chhabra, the Chief Financial Officer. A detailed presentation on the financial performance is available on the company's website and on the website of the stock exchanges as well. We will begin with Mr. Chandra providing a business update, followed by Mr. Chhabra covering the financial results. We expect the updates to take around 15 minutes, after which we will open the floor for the Q&A session of about 45 minutes. Before we proceed further, I would like to draw your attention to the cautionary statement, which is already included in the presentation. With that, I hand over the call to Arvind.
Arvind Chandra (Tenneco Clean Air India Ltd): Thank you, Rupali. Good afternoon, everyone. Thank you for joining us for Tenneco Clean Air India's Q2 and H1 FY27 earnings call. Before I begin, with Diwali around the corner, I would like to take this opportunity to wish all of you and your families
Arvind Chandra (Tenneco Clean Air India Ltd): a very happy and prosperous Diwali. May the festive season bring happiness, good health and prosperity to everyone. I am pleased to report another strong quarter Q2 and H1 FY '27 for the company building on the encouraging start we made to the year. The first half of FY '27 has been marked by healthy growth across our businesses, continued market share gains, and several important customer and technology wins. This performance reflects the strength of our portfolio, our strong customer relationships, and consistent execution across both Advanced Ride Technologies and Clean Air and Powertrain. During the second quarter, our value-added revenue grew 32.2% year-on-year, supported by volume growth of 25.4%. For the first half, value-added revenue grew 25.3% compared to volume growth of 20.7%. This growth has been supported by our continuous demand by continued demand across our served markets, new program launches, and increasing content per vehicle. Beyond the financial performance, I am particularly pleased with the progress we continue to make in strengthening our competitive position. According to the CRISIL research report, our market share in Clean Air solutions for the commercial truck segment increased further to 59% in H1 FY '27 compared to 58% in FY '26 and 57% in FY '25. In passenger vehicle shock absorbers and struts, also known as the ART business, we continue to maintain a strong leadership position with market share of approximately 55%. You would recall that just a year and a half ago, that share was only 48%. Let me now talk about some of the developments across our businesses during the quarter. In Advanced Ride Technologies, we continue to see strong momentum across both existing and new customers. We secured content on three new vehicle platforms with a leading Indo-Chinese joint venture. We also made an important entry into the fast-growing three-wheeler segment where our, where we won suspension business with a leading Indo-Korean joint venture. This opens up another addressable market for our suspension portfolio and further broadens our customer base. We continue to build on the momentum behind our unique daVinci technology as well. During the quarter, we started production for three-door Thar suspension program. We also secured two generation next-generation models with an existing leading Japanese passenger vehicle OEM and are further expanding our engagement with a Vietnamese OEM with the introduction of three new platforms. Another important highlight is the commercialization of advanced suspension technology in India. We supplied India's first locally produced semi-active CVSAe, marking a very important step in our localization journey and demonstrating the strength of our local engineering and technology capabilities. Turning to our Clean Air and Powertrain business, we made progress across commercial vehicle, alternative fuel, and ignition applications. During the quarter, we introduced a new hot-end commercial vehicle exhaust program with a leading Indian commercial vehicle OEM for bus applications. We also made a strategic entry into the CNG market through a cold-end assembly program for a European passenger vehicle application. In Powertrain, we further expanded our share of the business with an existing customer through a new spark plug award from a European passenger vehicle manufacturer. Taken together, these wins demonstrate that our growth opportunity is not dependent on any single product, customer, or end market. We are expanding across platforms, applications, and geographies while continuing to build on our existing customer relationships. Let me now spend some time on our order book, which provides us with very good visibility into our future growth. At the end of the first half, our lifetime order book stood at approximately INR165,000 million. This represents more than 100% coverage of our FY '30 revenue target, giving us good visibility towards our longer-term growth ambitions. Exports accounted for INR8,750 million of the total order book. Exports continue to form an important part of this opportunity. Our export order book now provides 50% coverage of our target FY '30 export revenue.
Arvind Chandra (Tenneco Clean Air India Ltd): our OEM customers. Now, beyond financial performance, we remain committed to sustainable and responsible growth. We were honored to receive the Best Manufacturing Brand Award from ET Edge and the National Green Future Leadership Award from the National CSR Leadership Congress. These recognitions reflect the dedication of our teams and our unwavering focus on operational excellence, innovation and sustainability. As we look to the second half of the year, we remain encouraged by the underlying momentum across our businesses. The combination of a robust order book, continued customer wins and technology-led growth, increasing export opportunities and investments behind our future capacity gives us confidence in our longer term growth trajectory. At the same time, the external environment continues to present challenges, particularly from inflationary pressures, including commodity related cost increases. We remain focused on addressing these through productivity, commercial discipline and rigorous execution across our operations as a part of our P3 people performance drive culture and operations framework. Overall, I believe the first half demonstrates the resilience of our business model and the progress we continue to make in strengthening our competitive position. With that said, I will hand it over to our Chief Financial Officer, Mahendra Chhabra to take you through our financial performance in greater detail.
Mahendra Chhabra (Tenneco Clean Air India Ltd): Thanks, Arvind. Good afternoon, everyone. As we enter the festive season, I would like to extend my best wishes to everyone for a Happy Diwali. May the occasion bring joy and happiness to you and your families. Now, let me take you through the financial performance for the second quarter and first half of FY '27. As always, we use value added revenue or VAR as our primary operating performance metric as it excludes pass through substrate cost and provides a more meaningful view of underlying operating performance and profitability of our business. This is consistent with how we have reported our financial performance in the past. We delivered another strong quarter building on the momentum from the start of the year. Revenue from operations increased 34.2% year-on-year to INR 17,183 million, while value added revenue grew 32.2% to INR 15,229 million. For the first half of '27, revenue from operations stood at INR 32,631 million, growing 27.2% year-on-year, while value added revenue reached INR 29,044 million, an increase of 25.3% year-on-year. Looking at the performance across our businesses, our growth remained quite broad-based. Clean Air and Powertrain Solutions delivered value added revenue of INR 7,218 million in Q2 FY '27, growing 26.6% year-on-year. For H1 '27, value added revenue stood at INR 13,843 million, representing growth of 17.8% year-on-year. This growth was supported by healthy underlying volumes and the continued ramp-up of the programs across our Clean Air and powertrain portfolio. On the other side, Advanced Braking Technologies continued to deliver strong growth, with value added revenue of INR 8,010 million in Q2 FY '27, an increase of 37.8% year-on-year. For H1 '27, value added revenue reached INR 15,201 million, growing 32.9% year-on-year. The performance was supported by strong production volumes, ramp-up of new programs and the increasing content across customer platforms. This performance reflects the continued scale up of our business and execution against our existing export programs. From a profitability perspective, EBITDA for Q2 increased 20.7% year-on-year to INR 2,616 million, translating into EBITDA margin of 17.2% on value added revenue. For H1 '27, EBITDA increased 14.1% year-on-year to INR 5,085 million, with an EBITDA margin of 17.5% on value added revenue. Moving further, profit after tax for the second quarter stood at 1,734 million, representing growth of 15% year-on-year. And for H1 FY '27, profit after tax stood at 3,386 million, growing 6.2% year-on-year. PAT compared with EBITDA during the first half should be viewed in the context context of a one-time interest income benefit of approx INR 254 million net of tax related to the sale of Motocare entity, which was recognized in H1 of previous year and therefore created a high base for comparison. Excluding this one-off item, the PAT would have been in line with EBITDA growth. Our profitability during the period was impacted by inflationary headwinds, including commodity costs, arising from geopolitical environment, increase in the minimum wages in couple of states, being
Mahendra Chhabra (Tenneco Clean Air India Ltd): currency and a premium rate plus the cost associated with operating as a public listed company. Despite these pressures, the impact was partially offset through commercial recoveries, productivity improvements and disciplined cost management, enabling us to maintain healthy profitability. Our operating performance continues to benefit from the maturity of Tenneco's P3 operating model, which is people, pride and performance. This framework remains deeply embedded across our operations and continues to drive improvements across safety, quality, delivery, inventory management and cost competitiveness. Our balance sheet remains strong, supported by a capital efficient operating model. We remain debt free and continue to maintain a net cash position. Our cash conversion cycle stood at -22 days, reflecting disciplined working capital management and strong cash generation efficiency. This enables us to fund our capital expenditure and growth requirements through internal accruals while maintaining financial flexibility for future investments. Our booked business already covering more than 100% of FY '30 revenue plan. We have strong visibility on the medium-term growth trajectory, supported by domestic as well as export programs. We continue to invest ahead of these commitments through planned capacity expansion across the country, including a new plant for clean air in West India. This new clean air plant will generate additional capacity of 12% to 14% for hot ends. To summarize, Q2 FY '27 saw strong growth and continued momentum across both our business segments, resilient profitability despite inflationary headwinds and a strong balance sheet. We remain focused on disciplined execution, commercial rigor, operational excellence and proactive management proactive management of external risks as we continue to pursue sustainable and profitable growth. With this, we'll now open the floor for questions.
Rupali Singh (Tenneco Clean Air India Ltd): Thank you. Thank you, Mahendra. We will now be moving to the Q&A session. We would request the participants to kindly limit their questions to two at a time. If you have any additional questions, please rejoin the queue. I would now hand over the meeting to the moderator to commence the Q&A session.
Moderator: Thank you very much. Thank you, ma'am. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
Moderator: The first question is from the line of Radha from Motilal Oswal. Please go ahead.
Radha (Motilal Oswal): Yeah. Hi, team. Thank you for the opportunity and congratulations on good performance. Sir, my question was regarding the margin compression in this quarter that has happened in the subsidiaries which majorly contains the suspension and other businesses, from 14% levels to 11 and a 11.6% in this quarter. So, wanted to understand how much of this is due to commodity pass through lag, and by when do you think it can be recovered back to previous levels?
102 more turns of this transcript: log in to Stocksigma to read the full call.