Hindustan Unilever’s demerged icecream unit Kwality Walls (KWIL) is a focused, pure-play ice cream entity and part of a multinational parent. Key brokerage house Nvama expects Kwality Walls to list in February and at a likely 5x EV/sales, around Rs 50–55 levels. According to their estimates this price is at a discount to HUL’s 9x EV/sales. Overall, they are positive on the HUL share price and retain ‘Buy’ with the target price unchanged at Rs 3,200 per share.
Here is a detailed analysis of Nuvama’s view on Kwality Walls –
Nuvama on KWIL: A rare listed ice cream business option with scale
According to the Nuvama report, the demerged ice cream unit will enter the market with revenue of around Rs 2,000 crore. Within HUL, the segment contributed only about 3% of overall turnover, but as a standalone company, it becomes one of the few listed frozen dessert and ice cream businesses of meaningful scale in India. The business has historically delivered EBIT margins of 5 to 9%, although recent quarters dipped to mid-single digits because weather weighed on sales.
Nuvama noted that the demerger allows the ice cream unit to operate with focused management and strategy, a shift from being a small component within a diversified FMCG portfolio. The firm added that the entity will continue to benefit from the portfolio, brand strength and innovation capabilities of The Magnum Ice Cream Company, which is described in the report as the world’s largest ice cream business. This connectivity, the brokerage said, equips the standalone company with brand momentum and product capability that few local players can match.
Nuvama on KWIL: Category tailwinds and GST support
Nuvama cites multiple factors that strengthen the case for a separate listed ice cream player. The Indian ice cream market is projected to grow at roughly 15% annually between 2024 and 2031. The brokerage highlighted that improving cold-chain networks and rising consumption are expanding demand across cities and smaller towns alike.
More significantly, the Goods and Services Tax (GST) on ice cream was cut from 18% to 5%, a change Nuvama believes will accelerate the shift from unorganised to organised brands. The lower tax burden increases affordability and encourages broader adoption, which the report says will reinforce category growth. For KWIL, this environment could support both volume expansion and improved competitive positioning as consumers gravitate towards established brands.
Nuvama on KWIL: Valuation and what it means for shareholders
Nuvama expects the ice cream business to be valued at a lower multiple compared to HUL because of its smaller scale and lower margin profile. According to the brokerage, KWIL accounts for about Rs 50 to 55 of HUL’s current market price of around Rs 2,404. This implies a listing valuation in the range of Rs 1,200 crore to Rs 1,500 crore.
Although the unit is modest in size relative to HUL, the listing offers existing shareholders a direct stake in a business operating in a growing consumer category. Nuvama estimates that once the ice cream business moves out of HUL’s consolidated financials, the parent company’s EBITDA margin will improve by 50 to 60 basis points. From the third quarter of FY26, HUL will report the ice cream division as a discontinued operation.
Nuvama on positioning KWIL for the market
The brokerage describes the demerger as a strategic move that hands the ice cream business the autonomy to shape its own operating model. A standalone listed company can respond more directly to seasonal demand, category shifts and marketing priorities without competing for capital allocation within a much larger FMCG organisation. With well-known consumer brands and backing from a global innovation ecosystem, Nuvama believes the new entity begins its listed life with recognisable strengths even as it must navigate margin volatility caused by weather patterns.
Nuvama maintained a buy rating on HUL with a price target of Rs 3,195, noting that the demerger offers investors two distinct exposures: HUL as a margin-accretive FMCG core and KWIL as a dedicated ice cream company operating in a category that is formalising rapidly and benefiting from favourable tax and consumption trends.