Tenneco Clean Air IPO sees strong turnaround on Day 2, subscribed 2.65 times so far; FIIs, NIIs drive demand

The Rs 3,600-crore IPO of Tenneco Clean Air India witnessed a sharp surge in demand on Thursday afternoon, with overall subscription jumping to 2.65 times as of 3:30 pm. Strong buying from foreign and domestic institutional investors powered the turnaround, while non-institutional and retail categories continued their robust traction from earlier in the day.

FIIs drive QIB demand; segment now 2.29 times subscribed

After a slow start on Day 1 and muted activity through the morning today, the QIB segment saw a decisive pick-up, subscribing 2.29 times by mid-afternoon. FIIs alone bid for 3.9 crore shares, while domestic institutions placed smaller but steady bids, and mutual funds accounted for 25.2 lakh shares. This sharp swing in institutional participation follows the deep anchor-level interest seen a day ahead of the Tenneco Clean Air IPO opened for public bidding.

NIIs remain the strongest contributors at over 6 times subscription

Non-institutional investors continued to dominate the bidding. The category was subscribed 6.27 times, with bids for 8.95 crore shares against the 1.43 crore reserved. Large NIIs (applications above Rs 10 lakh) subscribed 6.39 times; while small NIIs (Rs 2 lakh to Rs 10 lakh) subscribed 6.02 times. Demand from high-net-worth individuals and proprietary investors for Tenneco Clean Air IPO accelerated meaningfully compared to Day 1.

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Retail investors cross full subscription

Retail participation strengthened steadily through the day, reaching 1.31 times subscription. Investors placed bids for 4.36 crore shares, with a large majority opting for cut-off bids, indicating readiness to buy at the upper end of the price band (Rs 378-397).

IPO details

The IPO, which closes on November 14, is entirely an offer-for-sale (OFS) by promoter Tenneco Mauritius Holdings. The company will not receive any proceeds from the issue. The price band is Rs 378-397 per share, with listing scheduled for November 19 on NSE and BSE.

Tenneco shares have a robust grey market premium of 22 percent on Thursday, which is good considering the sector and export headwinds, said Shravan Shetty, Managing Director Primus Partners. "The key reason for it is the high domestic share (above 90 percent) and high ROE compared to peers." However, he cautioned that since the issue valuation is on the higher end of the sector P/E range, the long term upside post listing would be limited.

On November 11, the company raised Rs 1,080 crore from 58 anchor investors, including major domestic mutual funds and global institutions such as BlackRock, Fidelity, Nomura, Goldman Sachs, Abu Dhabi Investment Authority and Norway’s Government Pension Fund Global.

Business fundamentals attract investor interest

Tenneco Clean Air operates 12 manufacturing facilities and supplies clean air, powertrain and suspension systems to leading OEMs including Maruti Suzuki, Tata Motors, Mahindra & Mahindra, Hyundai, Ashok Leyland, and Bajaj Auto.

The company reported a 32.5 percent jump in FY25 net profit to Rs 552 crore, with EBITDA margin expanding to 16.7 percent. Brokerages highlight its strong market share -- 57 percent in clean-air solutions for commercial trucks and 52 percent in shock absorbers and struts for passenger vehicles -- while cautioning that customer concentration and the lack of fresh capital in the IPO may restrain near-term upside.

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