The initial public offering of Tenneco Clean Air India Ltd, a subsidiary of the US-based Tenneco Group, has officially opened for public subscription starting November 12 and will continue through November 14. The automotive components manufacturer has set its price band at ₹378 to ₹397 per share, making this one of the notable public issues in the current market season.
IPO Details and Market Response
Market sentiment appears positive for the Tenneco Clean Air IPO, with the grey market premium (GMP) currently standing at ₹61 per share. This indicates strong investor interest and suggests that shares could list at approximately ₹458 apiece, representing a potential 15.37% gain over the upper end of the IPO price band.
Just one day before the public offering launched, the company successfully raised ₹1,080 crore from anchor investors, demonstrating significant institutional confidence in the issue. The anchor book attracted participation from 58 prominent organizations, including major domestic and international players.
Prominent Anchor Investors and Allocation Structure
The list of anchor investors reads like a who's who of global finance, featuring SBI Mutual Fund, ICICI Prudential Mutual Fund, HDFC Mutual Fund, SBI Life Insurance, ICICI Prudential Life Insurance, Nomura Funds Ireland, Fidelity, BlackRock, Norway's Government Pension Fund Global, Abu Dhabi Investment Authority, and Goldman Sachs according to BSE circulars.
The company has established a clear allocation structure for the IPO: 50% for qualified institutional buyers, 35% for retail investors, and 15% for non-institutional investors. Investors can participate by bidding for a minimum of 37 shares and in multiples of the same number.
Brokerage Recommendations and Company Fundamentals
Leading brokerage firms have expressed optimism about the IPO. ICICI Direct has recommended a 'Subscribe' rating, citing the company's robust leadership in clean-air and ride performance systems, along with enduring relationships with original equipment manufacturers (OEMs).
The brokerage noted that Tenneco is well-positioned to capitalize on current trends in India's automotive sector, with structural advantages supporting sustainable growth. They highlighted the company's healthy 30%+ return ratios and reasonable valuations of approximately 29x PE and 19x EV/EBITDA on FY25 basis.
SBICAP Securities also endorsed the issue, emphasizing how the company skillfully utilizes its parent company's extensive intellectual property portfolio comprising 5,000 patents and 7,500 trademarks to develop products specifically tailored for Indian OEMs. They believe Tenneco is poised to benefit from the growing premiumisation trend in the Indian automotive market.
Offer Structure and Merchant Bankers
The Tenneco Clean Air IPO comprises exclusively of an Offer for Sale (OFS) from the promoter, Tenneco Mauritius Holdings Ltd, with no new equity being issued. Notably, the company increased its issue size from the initially planned ₹3,000 crore to ₹3,600 crore as per draft documents submitted in June.
Since the offering is entirely an OFS, the company will not receive any proceeds from the IPO; all funds will go directly to the selling shareholder. The primary objective of the public listing is to achieve the benefits of being a publicly traded entity.
The merchant bankers overseeing the Tenneco Clean Air IPO include JM Financial, Citigroup Global Markets India, Axis Capital, and HSBC Securities and Capital Markets (India). MUFG Intime India Pvt Ltd serves as the registrar for the issue.
Business Overview and Market Position
Tenneco Clean Air India specializes in manufacturing and supplying highly engineered, technology-driven clean air, powertrain, and suspension solutions designed specifically for Indian original equipment manufacturers as well as export markets. The company's focus on clean air technologies positions it well in an era of increasing environmental regulations and consumer awareness about vehicle emissions.
The promoters of Tenneco Clean Air include Tenneco Mauritius Holdings Ltd, Tenneco (Mauritius) Ltd, Federal-Mogul Investments BV, Federal-Mogul Pty LTD, and Tenneco LLC, providing the company with strong global backing and technological expertise.
Subscription for the public issue opened at 10:00 IST on Wednesday, marking the beginning of a three-day window for investors to participate in what appears to be a promising public offering in the automotive components sector.
