HUL continues to be in focus. The stock has surged over 2% in the last 2 days after the company announced the date for its demerger. Leading brokerage house, Nuvama is positive on Hindustan Unilever (HUL) has recommended ‘Buy’.
The brokerage has set a target price of Rs 3,200, which indicates a 33% upside from the current market price. According to the brokerage report, the shifting view mainly comes from the changes unfolding around HUL’s ice-cream business and how the demerger may alter the company’s financial profile.
Let’s take a look at the key reasons why the brokerage house is bullish on this stock –
Nuvama on Hindustan Unilever: The ice-cream demerger and what it means
According to Nuvama, the upcoming demerger of HUL’s ice-cream unit is central to its renewed stance. HUL has fixed December 5, 2025, as the record date for this demerger.
Under the 1:1 mirror shareholding structure, “each HUL shareholder shall receive one ice cream company (KWIL) share for every HUL share.”
The brokerage in its report highlighted that the business, though small at around 3% of HUL’s total turnover, has struggled recently because of weather-related pressure on margins.
One of the key reasons for the demerger, as stated in the report, is, “Demerger of ice cream business shall create a leading listed ice cream firm in India, which would have a focused management with greater flexibility to deploy strategies suited to its distinctive business model and market dynamics, thus realising its full potential.”
The brokerage also noted that the new entity will continue to operate with the global expertise of Magnum, saying it will benefit from “the portfolio, brand and innovation expertise of the largest global ice cream business, The Magnum Ice Cream Company.”
Nuvama on HUL: How the demerger may change valuation
The brokerage expects the ice-cream company to list with a relatively modest valuation because of its scale and slimmer profit margins. As stated in the report, “This implies ice cream business is around Rs 50–55 of HUL’s CMP (around Rs 2,400). KWIL’s market cap is likely to be around Rs 12–15 billion.”
Nuvama believes the demerger may help the parent company improve its profitability. As the report puts it, “We reckon HUL’s EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) margin shall improve 50–60bp post-demerger.”
Nuvama on HUL: What is happening in the ice-cream market
The brokerage also pointed to a shift happening in the broader ice-cream industry. According to the report, the Indian market is expected to grow at nearly 15% compound annual growth rate (CAGR) between 2024 to 2031. Better cold-chain facilities and changing consumer preferences are driving this expansion.
One major trigger, Nuvama noted, is the tax reduction on ice-cream. As per the report, the recent Goods and Services Tax (GST) cut from 18% to 5% is likely to support affordability and increase the participation of organised players.
Why has Nuvama rated HUL ‘Buy’
According to the brokerage report, the core reason driving the ‘Buy’ stance include the ice-cream business separation, expected margin recovery, industry growth trends, and the belief that short-term disruptions will normalise.
The report added,“We reckon HUL’s EBITDA margin shall improve 50–60bp post-demerger; retain ‘Buy’.”
