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The Indian stock market recently experienced a landmark event that has captured the attention of every retail investor and market analyst: the Kwality Wall’s demerger. Hindustan Unilever Limited (HUL), the giant of the Indian FMCG sector, has officially separated its ice cream business into a standalone entity called Kwality Wall’s (India) Limited (KWIL).
For decades, we have known HUL as the one-stop-shop for everything from soaps and shampoos to tea and ice cream. However, by spinning off brands like Cornetto, Magnum, and Kwality Wall’s, HUL is charting a new path. This strategic move is not just about changing company logos; it is a calculated attempt to unlock hidden value for millions of shareholders. In this blog, we will dive deep into the “why” and “how” of this historic split and what it means for your portfolio.
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Why Did HUL Separate the Ice Cream Business?
To understand how the Kwality Wall’s demerger unlocks value, we first need to understand why these two businesses were better off apart. While HUL is a master of distribution, the ice cream business is a “different beast” compared to selling detergent or tea.
1. Different Business Models
Most of HUL’s products are “dry” FMCG goods and they can be stored in a regular warehouse and transported in normal trucks. However, in the case of ice cream, it requires a cold chain. The reason is that for transporting from the factory to the local kirana store, the temperature must stay between -18°C and -22°C. These factors make this business capital-intensive and operationally complex.
2. Seasonality vs. Stability
Soaps and shampoos are used every day, regardless of the weather. Ice cream sales in India are heavily seasonal, peaking in the scorching summer months and dipping during the monsoons and winters. By separating the two, HUL’s main balance sheet becomes more stable and predictable, while the new ice cream entity can focus entirely on managing these seasonal swings.
3. Global Alignment
The Kwality Wall’s demerger is also a part of a global strategy by Unilever PLC. Globally, Unilever decided to separate its ice cream wing (which includes brands like Ben & Jerry’s) to simplify its own operations. Following this lead, HUL has given its Indian ice cream business the independence to grow under the majority ownership of a specialized global subsidiary, The Magnum Ice Cream Company.
How Value is Unlocked for Shareholders
1: What is a stock?
When a large company like HUL demerges a segment, it is often because the stock market is not giving that specific segment a “fair valuation” while it is hidden inside a larger conglomerate. Here is how the value is expected to be “unlocked”:
Direct Ownership through a 1:1 Ratio
In this demerger, HUL followed a very shareholder-friendly path. For every 1 share of HUL you held on the record date (December 5, 2025), you were allotted 1 share of the new company, Kwality Wall’s (India) Limited. This means you didn’t lose anything; instead, your single investment in HUL became two distinct investments.
Pure-Play Advantage
Before the split, investors who wanted to bet specifically on India’s booming ice cream market had to buy HUL, where ice cream was only about 3% of the total revenue. Now, Kwality Wall’s (India) Ltd is India’s first pure-play listed ice cream company. This attracts specialized investors and funds who want direct exposure to this high-growth category without the “noise” of the soap and detergent business.
Better Margins for HUL
The ice cream business, due to its high electricity and logistics costs, typically has lower profit margins than HUL’s beauty and personal care segments. Analysts estimate that removing the ice cream business could improve HUL’s overall EBITDA margins by about 50 basis points (0.5%). While 0.5% sounds small, for a company with a turnover of over ₹60,000 crore, it translates into significant profit growth, which often leads to a higher stock price for HUL.
The Growth Story of Kwality Wall’s (India) Ltd
While HUL becomes “leaner,” the newly formed KWIL gets the “freedom” to be more aggressive. The Kwality Wall’s demerger allows the new management to take risks that HUL might have avoided.
- Quick Commerce Explosion: With the rise of apps like Zepto, Blinkit, and Swiggy Instamart, ice cream has become an “impulse buy.” KWIL is now focusing heavily on these platforms to reach urban households in under 10 minutes.
- Expanding the Freezer Network: The company currently services about 2 lakh outlets with freezers. With independent capital, they plan to add nearly 50,000 freezers every year, moving deeper into Tier-2 and Tier-3 cities.
- New Brand Launches: There is already buzz about bringing global premium brands like Ben & Jerry’s and Carte D’Or to India. Being a standalone entity makes these international collaborations much smoother.
Challenges to Watch Out For
No investment is without risk. While the Kwality Wall’s demerger is a positive structural change, the new company faces stiff competition.
- The Amul Factor: Amul is the undisputed leader in the Indian ice cream market with a massive dairy-based supply chain. Kwality Wall’s, which largely operates in the “frozen dessert” (vegetable fat-based) and premium segments, will have to fight hard for market share.
- Initial Market Volatility: Following its listing in February 2026, the KWIL stock saw some “tepid” initial trading. This is common with demerged entities as “passive funds” (like Nifty 50 ETFs) might be forced to sell the new stock because it doesn’t fit their original index criteria.
- Capital Intensity: Building more cold storage and buying thousands of freezers requires a lot of cash. Shareholders of the new entity should be prepared for high reinvestment rather than immediate high dividends.
Kwality Wall’s India Listing Details on NSE
On February 16th, the shares of Kwality Wall’s India were listed on the NSE. Listed at Rs. 29.80 apiece, there was a discount of 25.87% over the indicative price of Rs.40.20 apiece. The Kwality Wall’s stock made its debut with a market capitalization of Rs.7001.78 crore. However, there was a drop in the stock price and fell nearly 2% to close at Rs.29.20 apiece on the first day of listing.
It is to be noted that this was at a discount of 27.36% from its indicative price. In the case of BSE, the stock made its debut at Rs.29.90 apiece. When compared to its indicative price of Rs.38.15 apiece, there was a lower discount of nearly 22%. Later, the stock fell 1.3% to close at Rs.29.51 apiece.
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Know moreExpert Views on Buying Kwality Wall’s Stock
Market experts have a mixed opinion on the prospects of the standalone ice cream business. Kranthi Bathini, Equity Strategist at WealthMills Securities opines that the outlook remains positive. According to him, the company is expected to do well. He went on to say that investors with a long-term view can consider buying the stock of Kwality Wall’s.
On the other hand, market veteran Arun Kejriwal shared a contrasting view, issuing a cautious note. At Hindustan Unilever, all other units were doing well except the ice cream business, says Arun. He also added that the markets were never pretty comfortable with this particular business. Arun concluded his views by stating that this stock is not going to make money for an investor in the near term whatsoever.
Key Takeaways for Investors
- Portfolio Diversification: You now own two different types of businesses: a stable FMCG giant (HUL) and a high-growth, high-risk ice cream player (KWIL).
- Strategic Focus: Both companies now have their own dedicated management teams, which usually leads to better decision-making and faster growth.
- Open Offer Opportunity: The new parent, The Magnum Ice Cream Company, has launched an open offer to buy more shares from the public. This can provide a “price floor” or a potential exit for those who do not wish to hold the new stock.
- Long-term Horizon: Value unlocking doesn’t happen overnight. While the Kwality Wall’s demerger sets the stage, the real gains will come from how well the new company expands its footprint across India over the next 3–5 years.
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Parting Words
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Know moreFrequently Asked Questions
What was the share ratio for the Kwality Wall’s demerger?
The ratio was 1:1. Shareholders received one share of Kwality Wall’s (India) Limited for every one share of HUL they held on the record date.
Why did the HUL stock price drop after the demerger?
The price adjusted because the value of the ice cream business was removed from HUL. Shareholders were compensated with new shares in the demerged entity.
Is Kwality Wall’s a "real dairy" ice cream company?
It offers a mix. While brands like Magnum are dairy-based, many Kwality Wall’s products are “frozen desserts” made using vegetable fats.
Who is the new owner of the ice cream business?
Post-demerger, the majority stake is held by The Magnum Ice Cream Company, a subsidiary of the global Unilever group.
Can I still buy Kwality Wall’s shares?
Yes, the company is now independently listed on the BSE and NSE and can be traded like any other stock.
Will HUL still sell food products?
Yes, HUL retains its “Nutrition” business, including brands like Horlicks, Knorr, and Kisan. Only the ice cream segment was demerged.
Is the demerger good for long-term investors?
Generally, yes. It allows both HUL and the ice cream business to focus on their unique strengths, potentially leading to better long-term returns.
