Tenneco Clean Air India is making waves in the market with its recent IPO, but the big question on everyone’s mind is whether this offer can bring long-term gains for investors. The company, a notable player in the auto components segment, is aiming to raise around ₹3600 crore through an offer for sale, which will bring its promoter holding down to about 74.8%. This move has certainly garnered significant attention from market watchers and potential investors alike.

Financially, Tenneco Clean Air India is showing some promising figures. The company reported revenue of approximately ₹3,070 crore for the fiscal year ending March 2024. Its net profit has also seen an encouraging upward trend, increasing from ₹381 crore in FY23 to ₹553 crore in FY25, showcasing solid profitability growth. Furthermore, its return on capital employed (ROCE) has surged impressively from 33.51% in FY23 to 56.78% in FY25, reflecting efficient management and strong operational performance.

In terms of market position, Tenneco Clean Air India stands as the largest supplier of shock absorbers and struts to Indian passenger vehicle original equipment manufacturers (OEMs), commanding over 50% market share in revenue terms. This dominant position strengthens its competitive moat in the automotive components sector.

The broader backdrop for Tenneco Clean Air India’s IPO is equally encouraging. The Indian automotive aftermarket is poised for robust growth, with industry reports estimating the market size to reach roughly $14 billion by 2028 and continuing its upward trajectory beyond that. The auto components sector is expected to attract significant investments, with forecasts suggesting up to ₹30,000 crore flowing into capacity expansions and EV (electric vehicle) part localization in the coming fiscal years. This growth is driven by rising automobile demand, a growing middle-class population, and expansions in global exports.

However, while the financials and market conditions look promising, investors should consider the inherent risks as well. The automotive industry, including the aftermarket, can be cyclical and influenced by broader economic changes, government policies, and shifts in consumer preferences, especially with the accelerating shift to electric vehicles.

In conclusion, Tenneco Clean Air India’s IPO presents an interesting opportunity for investors eyeing the automotive components space, particularly those optimistic about India’s long-term automotive growth story. The company’s strong financials, a noteworthy market share in critical product segments, and favorable industry growth trends form a solid foundation. Yet, as with any investment, potential investors should weigh the risks and evaluate their investment horizon before diving in. If the company continues its current growth trajectory and capitalizes effectively on the booming aftermarket and electric vehicle evolution, it could indeed deliver substantial long-term gains for its shareholders.