HUL's Kwality Wall’s Demerger: A New High for Investors

Post by : Bianca Suleiman

Shares of Hindustan Unilever Ltd (HUL) strengthened on Wednesday with the announcement of the demerger of its ice cream division, Kwality Wall’s (KWIL), setting December 5, 2025, as the record date. As of 12:38 PM, HUL was trading at ₹2,444.3 on the BSE, up 1.69%, exceeding the Sensex's rise of 0.44% to reach 85,048.04.

According to analysts at Nuvama Institutional Equities, HUL’s ice cream sector contributes approximately ₹50–55 to its current share price. Although it represents a modest 3% of HUL's overall turnover, the demerger is set to create significant value by granting investors direct stakes in a focused ice cream business, which boasts annual revenues nearing ₹2,000 crore with a healthy growth rate projected at 15–20% CAGR.

The spin-off will utilize a mirror-shareholding arrangement on a 1:1 basis, with HUL shareholders receiving one share of the new ice cream firm for each HUL share they own. This strategy aims to establish the premier listed ice cream franchise in India, supported by a dedicated management team and the agility to implement tailored strategies for the unique market landscape.

Kwality Wall’s, home to beloved brands such as Magnum and Cornetto, is strategically positioned to leverage the anticipated 15% CAGR in the Indian ice cream market from 2024 to 2031. Growth is fueled by advancements in cold-chain logistics, changing consumer preferences, and a recent reduction in GST on ice cream from 18% to 5%, fostering a transition towards organized players.

For HUL, the demerger is expected to enhance its EBITDA margin by 50–60 basis points after Q3FY26, since the ice cream unit will be classified as a discontinued operation starting Q3. Analysts predict that Q4FY26 could see a recovery, noting the stock's valuation at around 45 times FY27E EPS, presenting an appealing risk-reward scenario for investors.

This move underscores HUL’s ongoing strategy to refine its core FMCG operations while enabling the ice cream division to achieve its full potential under dedicated management.