News

Introduction: 

Donald Trump’s proposed 5% tax on remittances sent by non-citizens from the United States, as part of the “One Big Beautiful Bill Act,” could significantly impact the Indian economy. With India receiving approximately $120 billion in remittances in the previous fiscal year and the U.S. contributing around $32 billion (about 27.7% of the total), this policy could substantially reduce foreign exchange inflows, affecting household incomes and the broader economy.Telugu Samayam+2@EconomicTimes+2www.ndtv.com+2

Understanding the Proposed Tax

The proposed legislation seeks to impose a 5% excise tax on all outbound remittances made by non-U.S. citizens. This means that every time an Indian immigrant sends money back home, a portion would be siphoned off as tax by the U.S. Treasury. For instance, a remittance of $1,000 would incur a $50 tax. This tax would be collected by authorized remittance providers and remitted to the U.S. government quarterly. EconomicTimes

The Significance of Remittances to India

Remittances play a pivotal role in India’s economy. In the fiscal year 2023-24, India received approximately $120 billion in remittances, with the U.S. contributing nearly 28% of this amount, equating to around $32 billion. These funds are not just numbers on a balance sheet; they represent lifelines for millions of Indian families, funding education, healthcare, and daily living expenses.

Broader Implications For Indian Remittances

The proposed 5% tax on outward remittances by Donald Trump—if re-elected—could be far more than a policy shift; it may trigger a cascading series of macroeconomic disruptions for India.

1. A Direct Hit to Foreign Exchange Reserves

Remittances constitute a critical pillar of India’s foreign exchange inflows. In FY2023, India received $125 billion in remittances, with over $32 billion coming from the U.S. alone (World Bank, RBI). A 5% tax on these flows could disincentivize NRIs from using formal remittance channels, potentially pushing more transactions underground via informal or crypto-based transfers. It would reduce RBI’s dollar intake, adding pressure on India’s current account and foreign exchange reserves, which stood at $644 billion as of May 2024.

2. Weakened Rupee and Higher Import Costs

Reduced remittance inflows mean fewer dollars entering the Indian economy, which could depreciate the rupee. Since India is a net importer—especially of crude oil—a weaker rupee would inflate import bills, stoking cost-push inflation. It would leave the Reserve Bank of India with fewer options: either tighten interest rates to defend the rupee (hurting growth) or let inflation rise (hurting consumption).

3. Increased Economic Stress for Recipient Households

Remittances aren’t just macroeconomic variables—they directly support millions of households’ consumption, education, and healthcare. A World Bank study found that a 10% decline in remittance income leads to a 4% drop in household consumption in developing nations. In India, where nearly 20% of rural households rely on remittances, this could impact social welfare indicators and even widen inequality.

4. Real Estate and Consumer Goods Could Feel the Pinch

Remittance inflows are often routed into real estate investments, gold purchases, and consumer durable goods. A cut in these inflows could reduce liquidity in Tier 2 and Tier 3 city real estate markets, where NRI purchases are a big contributor. This could depress property prices, shrink the housing market, and ripple into industries like cement, paint, and appliances.

5. Impact on Education and Healthcare

Over 400,000 Indian students study in the U.S., contributing over $10 billion annually to American universities (Open Doors Report). Many of their families rely on remittances from relatives abroad to fund tuition and living expenses. A 5% remittance tax could increase financial burdens, reduce international enrollment, shift to cheaper destinations like Canada or Germany, or disrupt educational trajectories.

6. Global Image and Strategic Risk

India’s rise on the global stage is powered not just by economic metrics but also by soft power from its diaspora. A remittance tax, especially from a country housing over 4.5 million Indian-origin people, could strain diaspora engagement. It could also signal diplomatic tensions, particularly if Trump pairs this tax with tighter immigration and H-1B restrictions.

7. Stimulus to Alternative Systems

Ironically, this policy might unintentionally stimulate the adoption of decentralized finance (DeFi) platforms and cryptocurrencies for cross-border transactions. While this could foster innovation, it would erode the RBI’s control over capital flows, increase volatility, and complicate tax compliance.

While the intent behind the “One Big Beautiful Bill Act” may be to bolster U.S. revenues, its ripple effects could be far-reaching, especially for countries like India that heavily rely on remittances. As the global community watches closely, it remains to be seen how this proposal will evolve and what measures India might take to mitigate its potential impacts.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

When the heat rises, cold drinks rise higher on our wishlist. This year, the range of fruity refreshment beverages has an addition. The popular drink of the ’90s, Jumpin, is making a return under the wing of Rasna, a brand that itself defined summer beverages for millions of Indian households.

In a strategic move, Rasna has acquired Jumpin from Hershey’s India for an undisclosed amount; however, Jumpin itself is independently valued at ₹350 crore. With this acquisition, Rasna steps into the ₹1,000 crore Ready-to-Drink (RTD) market—one of the fastest-growing beverage segments in the country.

Source: Economic Times

Let’s dive into what this means for the industry, the consumer, and the legacy of two of India’s most loved beverage names.

A Sip of Nostalgia, Jumpin Back with a Bang

Jumpin was once a familiar name in Indian homes, offering fruity tetra packs and bottled drinks that were a hit with children and young adults, especially for being endorsed by celebrities. Originally owned by Godrej, it lost its shelf space after its later managers, Hershey India, decided to focus on other core categories like chocolates and syrups, before discontinuing the drink during the COVID-19 pandemic.

Rasna is set to relaunch the iconic brand in June as Jumpin Rich, positioning it as a low-sugar, vitamin-fortified fruit juice beverage. The drink is touted to be tastier, richer, and thicker in its new avatar. According to Group Chairman Piruz Khambatta, the sugar content has been reduced by 50% to make it a healthier choice.

Originally known for its Tetra Pak juices in the 1980s and ’90s, Jumpin is returning with modern packaging formats—PET bottles (250 ml, 600 ml, and 1.2 L) and Tetra Paks (125 ml, 200 ml, and 1 L). Pricing will begin at ₹10 for a 125 ml pack, ₹20 for a 250 ml PET bottle, and ₹99 for a 1-litre pack.

The initial rollout will include flavors like Mango, Lemon, Litchi, and Guava, targeting key urban and regional markets, with a phased expansion planned across the country. Future variants are also in the pipeline, featuring protein- and milk-based options aimed at Gen Z consumers and health-conscious families.

Khambatta shared that the acquisition was part of the company’s larger vision to expand beyond powder-based concentrates into ready-to-drink formats. This marks a significant shift for Rasna, which has traditionally ruled the powdered soft drink market for decades.

Source: CNBC TV 18

Why This Move Matters

Rasna’s acquisition of Jumpin is more than a business deal—it reflects changing consumer lifestyles, a smart brand revival, and a bold step into a fast-growing, competitive market.

1. Changing Consumer Habits: Ready-to-drink products have become more popular as consumers seek quick, on-the-go refreshment options. People don’t always have the time (or patience) to mix concentrates with water and sugar. Jumpin’s new avatar will cater to these evolving preferences.
   
2. Strategic Expansion for Rasna: While Rasna has a stronghold in the powder drinks segment, entering the RTD space allows it to tap into a more premium, impulse-driven market. It also places Rasna in more competitive retail spaces like convenience stores, malls, and vending machines.
   
3. Revival of Indian Brands: At a time when global beverage giants dominate shelf space, the comeback of Jumpin under an Indian FMCG house adds to the broader narrative of reviving Indian brands for Indian consumers, with a modern twist.
   

The Market Potential

The RTD relaunch comes at a time when India’s fruit juice market is estimated to be worth ₹1,000 crore, and growing rapidly, thanks to urbanisation, a rise in disposable income, and a younger demographic that seeks variety and convenience. 

The market is projected to reach from $7.85 in 2024 to approximately $13.59 billion by 2033 with a CAGR of nearly 6.3%, as per IMARC Group. Rasna also plans to reopen talks with Indian Railways to bring Jumpin back as an onboard beverage option.

Rasna, the five-decade-old instant beverage brand with ten manufacturing units and a distribution network spanning 1.8 million outlets, holds a dominant 90% share in India’s instant drink market. Amid this, players like Paper Boat, Frooti (Parle Agro), Tropicana (PepsiCo), and Maaza (Coca-Cola) have also proved to be be strong contenders. Rasna’s entry, backed by Jumpin’s legacy, adds a fresh wave of competition, especially in the fruit drinks sub-category.

Source: CNBC TV 18, Economic Times

Brand Synergy and Distribution Power

One of Rasna’s strengths is its vast distribution network across India, especially in rural and semi-urban markets where global RTD players don’t always reach effectively. This gives Jumpin a strong launchpad. Prior to being discontinued during the pandemic, Jumpin recorded an annual turnover of ₹150 crore across select markets. As part of its goal to reach ₹1,000 crore in revenue within the next two years, Rasna plans to scale the brand significantly. The company will tap into its extensive distribution network, with product availability set to begin in June 2025.

The brand also enjoys recall value, something money can’t buy. For many millennials, the Jumpin logo and name bring back childhood memories of school lunches and summer holidays. Rasna plans to play on this emotional connect while also targeting kids through attractive packaging and modern advertising.

Additionally, by acquiring a complete brand—with trademarks, formulations, and IP—Rasna avoids the time and cost of building a new RTD brand from scratch. Instead, it can leverage the existing equity of Jumpin and expand quickly.

Source: Business World

Conclusion

In a market that thrives on both innovation and nostalgia, Rasna’s acquisition of Jumpin is a well-timed, well-thought-out decision. It bridges the gap between India’s beverage past and its future—blending emotional legacy with modern business strategy.

For consumers, especially those who grew up in the ’90s and early 2000s, this is more than just a brand revival. It’s a return of memories. And for Rasna, it’s a chance to refresh its own identity while stepping into a lucrative, fast-moving market.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

FAQ

Protean eGov Technologies Ltd Shares, a Ramesh Damani-owned company, fell 20% on Monday to hit the lower circuit limit of ₹1,143.20 on the Bombay Stock Exchange (BSE). This decline came after the company disclosed that it was not shortlisted by the Income Tax Department (ITD) for its ambitious PAN 2.0 project, a government-led initiative to overhaul the technological infrastructure behind PAN and TAN systems in India.

If you’re wondering why this caused such a reaction in the stock market, Protean was widely expected to play a key role in this revamp. The company had bid to become the project’s Managed Service Provider (MSP). The news that it would not be advancing to the next round of the selection process triggered a sharp sell-off in the stock, erasing all the gains it had made in the past year.

Let’s explain what happened, why it matters, and the implications.

What Happened?

On Sunday, Protean informed exchanges via a regulatory filing that it had not been “considered favourably” by the ITD for the next round of the RFP (Request for Proposal) process for the PAN 2.0 project.

In the same filing, the company clarified that this setback is related to the government’s technology revamp of the PAN system, covering everything from design and development to implementation, operations, and maintenance. Importantly, Protean also stated that its current operations around PAN processing and issuance will continue under its existing mandate, with minimal or limited impact.

Despite this assurance, the market responded negatively. On Monday, the stock tanked 20%, hitting the lower circuit and closing at ₹1,143.20. This price is now over 4% lower than it stood a year ago, effectively wiping out a year’s gains.
Source: Economic Times

Who Owns Protean eGov?

Among the notable shareholders is veteran investor Ramesh Damani, who held a 1.05% stake in the company as of the March 2025 quarter. Other institutional investors include:

• State Bank of India (4.93%)
• Axis Bank (3.18%)
• Punjab National Bank (2.25%)
• Bank of Baroda (1.54%)
• Canara Bank (1.23%)

According to Trendlyne, the stock had four ‘buy’ recommendations, with an average target price of ₹2,104, indicating a potential upside of 47% before the recent crash. Source: Economic Times

What Is PAN 2.0?

The PAN 2.0 project is a large-scale government initiative with a budget of ₹1,440 crore. The objective is to rebuild the entire technology stack that supports the issuance and management of Permanent Account Numbers (PAN) and Tax Deduction and Collection Account Numbers (TAN) in India.

The new system aims to introduce straight-through processing, digitise the application journey, and improve deduplication and verification processes. The ITD sees the initiative as a long-term technology overhaul that would serve as the backbone of India’s direct tax infrastructure for the foreseeable future.

Protean, which has historically played a central role in PAN issuance, was expected to maintain or expand its involvement through this project. Missing out on this opportunity could reshape its role in the future of India’s tax-tech ecosystem.
Source: Financial Express

Why Is This Significant for Protean?

PAN services have historically contributed significantly to Protean’s overall business. In the first half of FY25, the PAN segment accounted for 61% of the company’s total revenue, and Protean held a 64% market share in cumulative PAN issuances. The segment grew 33% between FY22 and FY24, buoyed by rising PAN adoption and initiatives like the Aadhaar-PAN linkage deadline.

In January, the company highlighted the “significant headroom” in PAN-related services, noting that PAN penetration in India remains below 40%. However, without participation in PAN 2.0, its future growth in this space now looks uncertain.
Source: MoneyControl

What Did the Management Say?

In its regulatory filing, Protean emphasised that its current services would continue under the existing contract with the ITD. The company believes the new platform will have limited or minimal impact on ongoing PAN processing operations.

During its December earnings call, the management explained that the PAN 2.0 project aims to refresh the IT stack behind PAN issuance, improve backend processing, and introduce newer methods of application and distribution. However, they also admitted it was too early to estimate the revenue impact if the bid failed, stating, “We’ll have to see more clarity as the project gets implemented.”

What Do Analysts Say?

According to brokerage firm Equirus, the development poses a serious long-term risk to Protean’s revenue structure. While the immediate impact on FY26 earnings may be limited, Equirus forecasts a 75–100% decline in PAN-related revenue over the next 2–3 years. This could result in a 35% overall drop in total revenue by FY27.

The firm also noted that free cash flows previously used to support new business initiatives are now at risk, especially as other segments, such as ONDC retail volumes, remain stagnant. As a result, Equirus downgraded the stock from “Add” to “Sell” and sharply reduced its target price from ₹1,730 to ₹900. Source: Financial Express

Stock Performance Overview

Protean’s stock had already been showing signs of weakness:

• Down 15% over the past five trading days
• Down 22% over the past month
• Down 22% over the last six months

Monday’s 20% crash further deepened the stock’s downward trajectory, pushing it well below analyst expectations and significantly under its previously estimated fair value.

What Lies Ahead?

The key concern now is Protean’s dependency on PAN-related services, which form the bulk of its revenues. With this contract loss, the company may need to reassess its long-term strategy, diversify revenue streams, and explore other public digital infrastructure projects more aggressively.

For now, shareholders—including prominent names like Ramesh Damani and several major public-sector banks—are likely to closely monitor how Protean navigates this shift.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

According to data from the Reserve Bank of India (RBI), India’s foreign exchange reserves rose by $4.55 billion in the week ending May 9, 2025, reaching $690.62 billion, their highest level in seven months. This steady climb underscores the central bank’s active reserve management strategy and India’s robust macroeconomic fundamentals.

Breaking Down the Reserve Components

India’s forex reserves are made up of four key components:

• Foreign Currency Assets (FCAs)
• Gold Reserves
• Special Drawing Rights (SDRs)
• Reserve Tranche Position with the IMF

1. Foreign Currency Assets (FCAs)

The largest component, FCAs, consists of major global currencies like the USD, EUR, GBP, and JPY held in various central and commercial bank accounts abroad. These are influenced by capital inflows and valuation effects due to currency movements.

• As of May 9, FCAs rose by $3.67 billion to $642.29 billion, driven by positive valuation gains and strong foreign investor activity. (RBI Weekly Statistical Supplement).

2. Gold Reserves

India maintains a significant portion of its forex reserves in gold, both domestically and abroad. The surge in global gold prices—recently exceeding $2,400/oz—has added value to this component.

• Gold holdings increased by $842 million, taking the total value to $56.21 billion, reflecting both revaluation and strategic purchases by the RBI. (LiveMint). 

3. Special Drawing Rights (SDRs)

SDRs are reserve assets allocated by the International Monetary Fund (IMF) based on member quotas and are used as a supplementary forex buffer.

• The SDR component rose by $36 million to $18.16 billion, indicating stability in India’s allocation and valuation against the basket of global currencies.

4. Reserve Tranche Position (RTP) with the IMF

The RTP refers to India’s quota contribution to the IMF, which can be accessed without stringent conditions. It’s an emergency liquidity source and a small part of total reserves.

As of May 9, the RTP increased slightly by $9 million, reaching $4.06 billion. This increase is the third consecutive weekly rise, pushing India’s reserves closer to its all-time high of $645 billion in October 2021. (Source: RBI Weekly Statistical Supplement) 

Historical Context

India’s forex reserves have seen a remarkable trajectory over the past two decades:

This upward trend reflects India’s expanding trade, stronger capital flows, and prudent monetary management. The current level provides more than 11 months of import cover, well above the global safety threshold of 6 months. (Statista)

What’s Driving the Increase?

Several macroeconomic and policy-level factors have contributed:

FPI and FDI Inflows: Foreign portfolio investors have returned to Indian markets in 2025 after a volatile 2024. Strong GDP growth projections (above 7%) and stable inflation have improved investor confidence.  (Business Standard).

Currency Valuation Effects: The weakening of the US dollar against major currencies like the Euro and Yen has increased the dollar value of India’s non-dollar reserves.

Gold Price Surge: Global gold prices have surged past $2,400/oz in recent weeks, boosting the value of India’s gold holdings.

Stable Current Account Deficit: Thanks to services exports and remittances, India’s CAD is expected to remain below 2% of GDP in FY26.

Why Forex Reserves Matter

From an economic standpoint, high forex reserves serve multiple strategic roles:

• Currency Stability: A larger reserve base helps the RBI manage rupee volatility during external shocks or speculative attacks.
• Creditworthiness: Strong reserves enhance India’s sovereign credit rating and reduce borrowing costs.
• Investor Confidence: Reserves are a buffer against external vulnerabilities, reassuring foreign investors and rating agencies.
• Import Insurance: They act as insurance against disruptions in crude oil or essential commodity imports.

Implications for Indian Markets

The market implications of rising forex reserves are significant:

Stronger Rupee Outlook: The INR has appreciated modestly in May 2025, buoyed by the rise in reserves. This helps lower imported inflation.

Lower Bond Yields: As foreign investors perceive lower risk, Indian government bond yields may remain subdued, aiding fiscal borrowing.

Equity Market Boost: With better macro stability, Nifty and Sensex have seen increased participation from FPIs.

What Corporations Should Watch For

Cheaper External Borrowing: Indian corporates with overseas debt benefit from enhanced rupee stability and improved country risk perception.

Importers Gain Edge: Stable exchange rates lower the cost for firms reliant on imported inputs (e.g., electronics, oil & gas).

Exporters Face Pressure: While a stronger rupee aids inflation control, it could dampen competitiveness for export-oriented firms.

Geopolitical Context

India’s rising forex reserves come amid ongoing global uncertainties, including:

• US-China trade frictions
• Fed interest rate trajectory
• Oil price volatility

India’s reserve buffer gives it strategic autonomy and resilience economically and geopolitically in such a landscape.

Looking Ahead: RBI’s Policy Playbook

With inflation under control and GDP growth projections remaining solid, the RBI is expected to:

• Continue building reserves opportunistically via open market purchases
• Maintain a liquidity balance to avoid overheating
• Intervene when necessary to ensure rupee stability

India’s external position is also supported by $112 billion in net FDI inflows over the past three years, and a record-high in services exports projected at $385 billion in FY26.

Conclusion

India’s foreign exchange reserves crossing the $690 billion mark is more than a statistical milestone. It reflects a deeper structural strength in India’s macroeconomic framework. India’s reserve buffer enhances economic credibility and strategic clout in a world marred by uncertainty.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

The cool scoop finally got the approval for the strategic move the company has been planning since January 2025—the green signal to proceed with Hindustan Unilever Limited (HUL) demerging its ice cream arm, Kwality Wall’s, leading to a newly formed company, Kwality Wall’s (India) Limited (KWIL). 

With all necessary approvals in place, the demerger is set to reshape both HUL’s business structure and the dynamics of India’s ice cream industry. But what does this mean for shareholders, and how will the transition unfold? 

HUL Overview:

Hindustan Unilever Limited (HUL) is a leading FMCG company in India. It operates across four primary business segments: Home Care, Beauty and Wellbeing, Personal Care, and Food and Refreshment. Each segment significantly addresses diverse consumer needs, making HUL a dominant player in the Indian FMCG sector.

• Home Care: 

This segment contributes approximately 35-36% to HUL’s revenue, driven by household cleaning products under brands like Surf Excel, Rin, Wheel, Vim, Cif, and Domex. Despite the divestment of the Pureit water purifier business, premium products within Home Care continue to show double-digit growth. In the March 2025 quarter, the segment garnered a revenue of ₹22,972 crore. 

• Beauty & Wellbeing: 

Accounting for around 36-37% of revenue, this segment encompasses skincare, haircare, and color cosmetics with brands like Dove, Ponds, Lakme, Sunsilk, and Indulekha. The recent acquisition of a 90% stake in Minimalist highlights HUL’s strategic focus on expanding its premium beauty portfolio. The segment generated revenue of ₹13,073 crore in the March 2025 quarter.

• Personal Care: 

This segment generates 13-14% of revenue and includes essential products such as oral care (Pepsodent, Closeup) and skin cleansing (Lifebuoy, Lux, Pears). As of the March 2024 quarter, the segment made a revenue of ₹9,168 crore. 

• Foods & Refreshments: 

This segment contributed 25-28% to revenue and made ₹15,294 crore in revenue in Q4FY2025. The segment covers tea, coffee, culinary products, health drinks, and ice cream brands such as Lipton, Bru, Knorr, Horlicks, and Kwality Wall’s. Notably, the ice cream business, representing 2.7% of turnover, is undergoing a demerger to allow focused growth. 

Financial Overview of HUL:

• Revenue Trends

HUL’s standalone revenue reached ₹61,896 crore in FY2023–24, up 2.2% from ₹60,560 crore the previous year. Even for the consolidated revenue, there was a growth to ₹63121 crore in FY2025. For the March 2025 quarter, revenue stood at ₹60,680 crore, indicating consistency in topline performance.

• Profitability Trends

The standalone profit after tax (PAT) rose to ₹10,282 crore in FY2023–24, a 1.4% increase from ₹10,143 crore in FY2022–23. Net profit margin remained at 16.6%, while operating margin improved to 23.7%. 

In FY2025, HUL’s consolidated PAT was ₹10,679 crore, showing continued profitability despite margin pressures. Additionally, PAT for the March 2025 quarter stood at ₹10,644 crore.

• Dividends and ROCE

HUL declared a total dividend of ₹42 per share for FY2024–25, including a final dividend of ₹24, up 8% year-on-year. Return on Capital Employed (ROCE) remained strong at 96.3%, highlighting efficient capital use.

(Source- Financial Statement)

Overview Of The Brand Kwality Wall’s:

Kwality Wall’s, Cornetto, and Magnum contributed nearly ₹1,800 crore (3%) to HUL’s revenue in FY24. Now set to operate independently as Kwality Wall’s (India) Limited (KWIL), the brand is an essential player in India’s ₹30,000 crore ice cream market, which is projected to reach ₹50,000 crore by 2028. While Amul leads in market share, Kwality Wall’s has a strong foothold in premium and in-home segments. The demerger positions KWIL to focus solely on the ice cream business, aiming to expand its share in a market where unorganized players still hold 37%. 

The Demerger of HUL and Kwality Walls:

On January 22, 2025, the Board of Directors of Hindustan Unilever Limited approved demerging its ice cream business into Kwality Wall’s (India) Limited (KWIL), a wholly-owned subsidiary established specifically for this purpose on January 10, 2025. This decision was made following a feasibility assessment initiated in September 2024. 

On May 14, 2025, HUL secured regulatory approvals from BSE and NSE. Once the demerger is finalized, existing HUL shareholders will receive direct ownership in KWIL, which will be independently listed on both exchanges by FY2026. 

As a result of the demerger, HUL has proposed a 1:1 share allocation ratio, meaning:

• For every equity share held in HUL, shareholders will receive one equity share in KWIL.
• Following the demerger, existing shareholders of HUL will own 100% of KWIL’s shareholding, allowing them to participate directly in the independent entity’s growth.
• Investors can also choose to remain invested in HUL and KWIL or adjust their holdings based on their investment strategy. (Source: Mint)

Strategic Vision Behind The Demerger:

Several strategic and operational considerations drive the demerger:

1. Distinct Operational Model: The ice cream segment requires a dedicated cold chain infrastructure and specialized distribution network, distinct from HUL’s broader FMCG operations.
2. Global Strategy Alignment: Unilever PLC intends to separate its ice cream businesses to unlock specific growth potential, aligning with HUL’s move to demerge Kwality Wall’s.
3. Focused Growth: By establishing KWIL as a standalone entity, HUL aims to position it as a leading ice cream company in India, leveraging Unilever’s global expertise and portfolio.
4. Resource Optimization: The separation enables HUL to concentrate resources on high-growth segments such as Beauty and Wellbeing, Food, and Health, aligning with its broader strategic vision.
5. Growth Potential: The ice cream business generated a turnover of ₹15.95 billion in FY24, accounting for 2.7% of HUL’s total revenue.
6. Unlocking Value: HUL CEO Rohit Jawa emphasized that the demerger would unlock fair value for shareholders by establishing a focused, pure-play ice cream business.

Impact on Hindustan Unilever (HUL):

Post-demerger, HUL will focus more sharply on its core FMCG segments. The company can streamline its structure, reallocate resources, and direct management attention to higher-growth and higher-margin areas.

The ice cream business accounted for only about 2.7% of HUL’s standalone revenue in FY24, so the financial impact on overall turnover is expected to be limited. Plus, due to the demerger, the share price of HUL rose from the previous close of May 14, 2025, ₹2370 to closing at ₹2381.4 on May 16, 2025. 

Conclusion: What This Means For Investors?

With the demerger now progressing toward completion, shareholders of HUL will receive one equity share of KWIL for every share they hold in HUL, resulting in direct ownership in both entities. This creates an opportunity for investors to participate in two separately managed businesses: HUL with its core FMCG portfolio, and KWIL as a focused ice cream company. Both companies will operate independently, with distinct growth strategies and financial priorities.

As KWIL’s listing approaches (expected by FY2026), investors may observe further clarity on its operational roadmap, market positioning, and financial structure. In the meantime, you will need to track how each business performs independently to get a clearer picture of where the businesses are headed in the market. 

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

FAQs

Introduction

UnitedHealth Group Inc. is one of the largest healthcare companies in the United States, operating through two core business segments: UnitedHealthcare and Optum. UnitedHealthcare provides health benefit plans and services for individuals, employers, Medicare, and Medicaid beneficiaries. Optum, on the other hand, offers data—and technology-driven services, including healthcare delivery, pharmacy care services, and clinical insights.

These arms serve over 150 million individuals across the U.S. and numerous global markets. UnitedHealth has long been seen as a bellwether for the health insurance industry, frequently ranking on the Fortune 500 list and maintaining strong investor confidence.

In a stunning turn of events, shares of UnitedHealth Group Inc. (NYSE: UNH) plunged to a five-year low on Thursday, May 15, 2025, on the New York Stock Exchange. The decline followed a report from The Wall Street Journal that revealed a potential U.S. Department of Justice (DOJ) investigation into the company. The news triggered a sharp selloff, wiping billions from the company’s market value and intensifying scrutiny on the health insurance giant. (Source: LiveMint)

Why Are UnitedHealth Group Shares Falling?

According to The Wall Street Journal, the DOJ has investigated UnitedHealth for possible Medicare fraud tied to its Medicare Advantage business. The report, citing unnamed sources, indicated that the probe has been ongoing since at least mid-2024 and is focused on whether UnitedHealth deliberately overstated patients’ medical conditions to receive inflated reimbursements from the federal government.

In a prompt rebuttal, UnitedHealth denied the claims, stating: “We have not been notified by the Department of Justice of the supposed criminal investigation reported, without official attribution, in the Wall Street Journal today.”

The company condemned the report as irresponsible and reaffirmed its commitment to the integrity of its Medicare Advantage programme. “The WSJ’s reporting is deeply irresponsible, as even it admits that the ‘exact nature of the potential criminal allegations is unclear.’ We stand by the integrity of our Medicare Advantage program,” the statement added. Despite the denial, the market reaction was swift and severe. (Source: LiveMint)

Mounting Challenges for UnitedHealth

The news of a federal probe comes amid a turbulent period for the insurer, marked by multiple headwinds:

• Leadership crisis: Earlier this week, CEO Andrew Witty abruptly resigned, further shaking investor confidence.
• Suspension of 2025 outlook: UnitedHealth pulled its guidance for 2025, citing unpredictable medical costs and shifting regulatory landscapes.
• Regulatory scrutiny: UnitedHealth is facing other government inquiries beyond the alleged DOJ probe.

These developments have painted a bleak near-term picture for the company, making it vulnerable to any additional negative news, such as the recent report. (Source: LiveMint)

Market Impact: Numbers That Matter

Date	Price per Share (USD)	% Change
May 14, 2025	$263.29	-14.52%
May 15, 2025 (Low)	$248.88	-19.19% (intraday drop)
5-Day Trend	N/A	-31.74% (MarketWatch)
Since Nov 2023 Peak	~$540 (approx.)	-Over 50%

Over the past eight trading sessions, UnitedHealth shares have posted consecutive losses, with over $110 billion wiped out from their market capitalisation this week alone. Since November 2023, the company has seen $300 billion in value erased, highlighting the severity of investor fallout.

Analyst Commentary: Caution and Concern

James Harlow, Senior Vice President at Novare Capital Management, which holds a position in UnitedHealth, told Reuters:

“The stock is already in the doghouse with investors, and additional uncertainty will only pile on.”

Market analysts echo similar sentiments, warning that the selloff could continue unless the company provides more transparent and consistent communication.

While some investors hope for a rebound, the lack of clarity and rising regulatory risks will likely keep the stock under pressure. (Source: LiveMint)

What is Medicare Advantage, and why is it Under Scrutiny?

Medicare Advantage is a federally funded programme administered by private insurers like UnitedHealth. It offers an alternative to traditional Medicare and often includes added benefits such as vision, dental, and wellness programmes. However, the system has come under increasing scrutiny from lawmakers and regulators due to concerns about fraudulent billing and a lack of oversight.

UnitedHealth is the largest provider of Medicare Advantage plans in the United States, making it a prime target for audit and enforcement activities.

Investor Outlook: What Lies Ahead?

The coming weeks will be critical for UnitedHealth. Key areas investors should monitor include:

• Any official confirmation or denial from the DOJ
• Further disclosures from the company regarding its internal audits or compliance practices
• Earnings calls or public addresses from interim leadership
• Changes in analyst recommendations or credit ratings

With its stock halving since its 2023 peak, the next major support level could further test investor patience. Until then, uncertainty and volatility are expected to dominate the narrative.

Final Thoughts

UnitedHealth Group faces one of the most serious crises in its corporate history. Whether or not the DOJ allegations are substantiated, the company must act swiftly to restore credibility. Until then, investors will likely brace for continued volatility in one of the market’s most-watched healthcare giants.

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