HUL Demerger Shakes Up Market: Your Ice Cream Business is Now Separate! Get Ready for New Shares!

Hindustan Unilever (HUL) is making a significant move by demerging its popular ice cream business into a separate, publicly traded company called Kwality Wall’s (India) (KWIL). December 5 serves as the crucial record date, determining which shareholders are eligible to receive shares of the new entity.

The Demerger Explained

This strategic decision separates HUL’s extensive ice cream portfolio, featuring brands like Kwality Wall’s, Cornetto, Magnum, Feast, and Creamy Delight, from its parent company. Following the demerger, HUL will continue to operate as a focused Fast-Moving Consumer Goods (FMCG) company, while KWIL will stand as India’s premier independent ice cream business.

Shareholder Entitlement

Under the approved demerger scheme, the entitlement ratio is set at one KWIL share for every HUL share held. Due to T+1 settlement rules in Indian stock markets, investors needed to have purchased HUL shares by December 4, the last trading day, to qualify for receiving the new shares. These shares will be credited to eligible shareholders' demat accounts once the allotment process is finalized.

Price Discovery Session

Both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) will conduct a special pre-open trading session for Hindustan Unilever shares on December 5, from 9:00 a.m. to 10:00 a.m. This session is designed to establish HUL’s ex-demerger share price by removing the valuation of the ice cream business, ensuring a fair starting point for the demerged stock.

Listing Timeline for KWIL

Kwality Wall’s (India) shares are projected to be listed on both the BSE and NSE within approximately 60 days from the allotment date, which places the expected listing between late January and February 2026. In the interim, KWIL will be temporarily included in Nifty indices with a zero price and a dummy symbol to aid in price discovery before its independent trading begins.

Market Impact

• The demerger creates two distinct, focused business entities, potentially unlocking shareholder value by allowing each to pursue its strategic goals more effectively.
• HUL can concentrate on its core FMCG operations, while KWIL can innovate and expand within the specialized ice cream market.
• Investors gain direct exposure to a dedicated pure-play ice cream company, a segment with significant growth potential.
• Impact Rating: 8/10

Difficult Terms Explained

• Demerger: The process where a company splits off a division or business unit into a new, separate company.
• Record Date: The date used to determine which shareholders are eligible for a corporate action, such as receiving new shares.
• Entitlement Ratio: The ratio at which existing shareholders receive shares of the new entity relative to their current holdings.
• T+1 Settlement: A trading system where a trade is settled (shares and money exchanged) one business day after the trade date.
• Pre-Open Session: A trading period before the market's regular opening hours, used for price discovery or order matching.
• Price Discovery: The process of determining an asset's market value through the interaction of buyers and sellers.
• Pure-play: A company that focuses exclusively on one specific industry or product.
• Demat Accounts: Electronic accounts used to hold securities like shares.
• Bourses: Stock exchanges.