HSBC Global Investment Research has initiated coverage on Tenneco India with a ‘Buy' rating and target price of Rs 700, implying an upside of nearly 35% from current levels. The brokerage's positive stance is anchored in the company's strong positioning in the premiumisation cycle of suspension systems and its growing role as a global export hub for its parent. At the core of HSBC's thesis is Tenneco's dual-engine growth model—domestic premiumisation and export-led expansion.
The company operates across two key divisions: Clean Air India (CAPS) and Advanced Ride Technologies (ART), both of which are expected to benefit from structural tailwinds. HSBC highlights that stricter emission norms are increasing content per vehicle in the CAPS division, supporting steady growth.
At the same time, the ART division is seeing strong traction from the premiumisation of passenger vehicle suspensions, as consumers increasingly shift toward higher-end vehicles with advanced ride technologies.
A key driver, however, remains exports. HSBC expects India to emerge as a low-cost manufacturing hub within Tenneco's global network, aided by access to parent technology, patents, and global OEM relationships.
Domestic Growth Steady, Not Spectacular
The brokerage forecasts a 33% CAGR in export revenues between FY26–FY30E, significantly outpacing domestic growth. A strong export order book of nearly Rs 20 billion provides visibility, with new platform wins and client additions further strengthening the outlook.
On the domestic front, HSBC expects a more measured ~12% CAGR over FY26–FY30E, driven by steady demand in both emission systems and suspension components. While not the primary growth engine, domestic business provides stability and margin support.
Overall, HSBC models a 14% CAGR in revenue and EBITDA over FY26–FY30E, with PAT expected to grow at ~15% CAGR. Margins are likely to remain stable in the 18–19% range, supported by operating leverage and a favourable product mix, despite some cost pressures. HSBC believes Tenneco is well-positioned to benefit from the ongoing global supply chain realignment, with India increasingly playing a central role in auto component exports.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
