HUL Ice Cream Demerger Sparks Investor Optimism

Hindustan Unilever Ltd (HUL) shares gained momentum on Wednesday following the announcement of the demerger of its ice cream unit, Kwality Wall’s (KWIL), with December 5, 2025, marked as the record date. At 12:38 PM, HUL traded at ₹2,444.3 on the BSE, up 1.69%, outperforming the Sensex, which rose 0.44% to 85,048.04.

Analysts at Nuvama Institutional Equities estimate that HUL’s ice cream business represents roughly ₹50–55 of its current share price. While it contributes only about 3% to HUL’s total turnover, the demerger is expected to unlock value by allowing shareholders direct ownership in a pure-play ice cream company with annual revenues near ₹2,000 crore and a strong growth trajectory of 15–20% CAGR.

The spin-off will follow a mirror-shareholding structure at a 1:1 ratio, meaning each HUL shareholder receives one share of the new ice cream entity for every HUL share held. This move is designed to create India’s leading listed ice cream franchise, with a focused management team and enhanced flexibility to pursue strategies tailored to the segment’s unique dynamics.

Kwality Wall’s, with iconic brands like Magnum and Cornetto, is positioned to benefit from the Indian ice cream market’s expected 15% CAGR over 2024–2031. Industry growth is being driven by better cold-chain infrastructure, evolving consumer preferences, and a GST cut on ice cream from 18% to 5%, which is expected to accelerate the shift from unorganised to organised players.

From HUL’s perspective, the demerger is anticipated to improve the company’s EBITDA margin by 50–60 basis points post-Q3FY26, as the ice cream business will be treated as a discontinued operation from Q3. Analysts see the Q4FY26 period as a potential recovery phase, with the stock trading around 45 times FY27E EPS, offering an attractive risk-reward opportunity for investors.

The move not only highlights HUL’s strategy to streamline its core FMCG operations but also allows the ice cream business to realise its full potential under a dedicated management focus.