HUL's Ice Cream Division Demerger Fuels Investor Enthusiasm

Hindustan Unilever Ltd (HUL) experienced a surge in its stock prices on Wednesday after revealing the planned demerger of its ice cream division, Kwality Wall’s (KWIL), with a record date set for December 5, 2025. By 12:38 PM, HUL shares were priced at ₹2,444.3 on the BSE, reflecting a 1.69% increase, significantly outpacing the Sensex, which rose by 0.44% to 85,048.04.

Analysts from Nuvama Institutional Equities predict that HUL's ice cream segment contributes approximately ₹50–55 to its current share value. Although this segment accounts for only about 3% of HUL’s overall revenue, the demerger is expected to unlock significant value by allowing shareholders to own a fully dedicated ice cream business, boasting annual revenues close to ₹2,000 crore and a robust growth rate of 15–20% CAGR.

The demerger will adopt a mirror-shareholding format at a 1:1 ratio, ensuring that each HUL shareholder will receive one share in the new ice cream company for every HUL share they hold. This initiative aims to establish India’s premier listed ice cream brand, offering a focused management team and greater adaptability to the unique dynamics of the segment.

Kwality Wall’s, featuring well-known brands such as Magnum and Cornetto, is poised to capitalize on the expected growth of the Indian ice cream market, projected at 15% CAGR from 2024 to 2031. This industry expansion is fueled by improvements in cold-chain infrastructure, shifting consumer preferences, and a reduction in GST on ice cream from 18% to 5%, facilitating a transition from unorganized to organized sector players.

From HUL’s viewpoint, the demerger is likely to enhance its EBITDA margin by 50–60 basis points after Q3FY26, as the ice cream sector will be classified as a discontinued operation from Q3 onwards. Analysts anticipate Q4FY26 as a critical recovery timeframe, with the stock trading at approximately 45 times FY27E EPS, presenting a compelling risk-reward scenario for investors.

This strategy emphasizes HUL’s intent to refine its core FMCG activities while allowing the ice cream sector to pursue its full potential under focused leadership.