HUL’s Kwality Wall’s Demerger: Strategic Shift, Market Implications, and Shareholder Takeaways

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. 

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