Some of the country’s top corporate houses are opting to split their operations in a bid to unlock value. The move also comes as some companies look to strengthen their core or primary businesses, hiving off and listing non-core operations into a separate unit. Still others see sense in giving investors an opportunity to partake off growth in an allied business, as ITC sought to do with the demerger of its hotels business from the parent firm, experts said.
Apart from ITC, FY25, saw firms such as Hindustan Unilever (HUL), Raymond, Aditya Birla Fashion and Retail, Siemens and Vedanta take the demerger route. Experts say that FY26 may see the trend persist as companies continue to unlock value of their businesses in a bid to streamline operations.
“Companies quite often look to separate their businesses in a bullish market. The core motivation here being the desire to grant them autonomy. While FY25 has seen quite a few firms opt for demergers, the trend is likely to persist in FY26,” Shriram Subramanian, founder and MD of proxy advisory firm InGovern, said.
Tata Motors will split into two by October, 2025, officials of the firm had indicated earlier this year. While Raymond will transfer its real estate assets and operations to Raymond Realty next month after demerging and listing its lifestyle business in FY25. Business services provider Quess Corp, meanwhile, will list two units – Bluspring Enterprises and Digitide Solutions – in two months, after getting the NCLT nod for the same, executives at the company said this month, adding it would help in improving management focus across its businesses.
“What a demerger allows a firm to do is to focus on enhancing efficiencies, pursue niche growth strategies and respond more effectively to their respective markets,” G Chokkalingam, founder and MD of Mumbai-based firm Equinomics Research, said.
Quess Corp, said experts, is undergoing a three-way demerger. It will split into a workforce management unit, which will be housed under the flagship company (Quess Corp), separate BPM, Insurtech and HRO operations into Digitide Solutions, and take infrastructure services into Bluspring Enterprises. Shareholders will receive one share in each new entity for every Quess Corp share held, its demerger scheme said.
HUL, on the other hand, will demerge its ice-cream business into Kwality Wall’s India, it said in January, with one equity share of the latter to be allotted for every share held in HUL. Kwality Wall’s India is expected to list on the bourses in the new financial year. The turnover of HUL’s ice-cream business is around Rs 1,800 crore, which is close to 3% of its nearly Rs 60,000 crore turnover, according to sector experts.
“Our ice cream category is a high-growth business with brands such as ‘Kwality Wall’s’, ‘Cornetto’ and ‘Magnum’, operating in an attractive segment. The demerger will unlock fair value for HUL shareholders and give them the flexibility to stay invested in the growth journey of the business,” Rohit Jawa, CEO and MD of HUL, said.