HUL Demerger: HUL Shares Decline 3.5% as Kwality Wall’s Isolation Comes into Effect—Crucial Updates for Investors

The long-anticipated demerger of the ice-cream business by Hindustan Unilever officially took place on December 5, 2025, and this was a significant change for one of the largest FMCG companies in India. HUL shares will be trading today without the Indian part of the Kwality Wall's existence, and the investors designated on the record date of December 5 will obtain shares of the newly established company free of charge.

At the time of the exchanges, the special pre-open session created considerable volatility. The HUL stock dropped almost 7% later it bounced back to instantaneously outperform and finished the day with a decrease of 3.5% at ₹2,339 on the BSE.

What the HUL Demerger Indicates

The ice-cream business was the biggest contributor of all HUL's brands that were solely dedicated to the hitherto combined entity, Kwality Wall's India Ltd (KWIL) when the merged entity was distributed to the shareholders.

The restructuring was designed to initiate a gradual unlocking of HULs value while also allowing the ice-cream business to develop at a much higher rate, faster than HUL's overall pace.

Share Entitlement and Important Dates

1:1 Share Ratio

Every HUL stockholder shall be granted one share of KWIL for every share of HUL that is held on the record date.

Record Date

December 5, 2025 — Only shareholders who are registered as of this date will be entitled to receive KWIL shares free of charge.

Share Allotment Date

December 29, 2025.

Listing Timeline

As per the SEBI regulations, KWIL will have to be listed within 60 days of the NCLT approval.

The new stock will be temporarily included in the Nifty 50 index under a dummy symbol at zero price until trading starts.

How HUL Share Price Was Adjusted

BSE and NSE conducted a special pre-open session for price discovery.

The adjusted HUL price is indicative of the exclusion of the ice-cream business from the valuation of the parent company.

While the stock dropped sharply at the start, it managed to get back on track later in the day as the volatility subsided.

Analyst Views: Goldman Sachs & Morgan Stanley React

Goldman Sachs – Buy Rating (₹2,850 Target)

Q2 results in line with expectations

Gradual GST transition impact expected to disappear

Leadership under CEO Priya Nair targeting volume-driven growth

Morgan Stanley – Equal-Weight (₹2,335 Target)

Q2 volumes affected by GST changes, but recovery anticipated shortly

Gross margin increased albeit offset by more trade costs

Separation of ice cream brand could help margins by 50-60 bps

How Much Is the Ice-Cream Business Worth?

Kwality Wall's India accounts for around 3% of HUL's sales and is responsible for the company's annual revenue of ₹1,800 crores.

Broker estimations:

Valuation: ₹9,500 crores - ₹11,900 crores

Value per share: ₹40-50

The market will eventually recognize this value when the stock becomes available for trading.

Impact on Your Investment: Cost Allocation Explained

The total value of your HUL investment is still the same—but your original investment will be shared between HUL and KWIL once the breakup ratio is announced by the company.

For example:

If you acquired 100 shares of HUL at the rate of ₹2,000, the cost of your ₹2,00,000 will be distributed over both stocks based on the final apportionment.

Why HUL Chose to Spin Off Kwality Wall's

HUL maintains ice cream is a high growth category, but it has become hard to operate its business like other FMCG categories due to its unlike model. However, the demerger:

Allows Kwality Wall's to be more vertically integrated in its supply chain and thus faster grow

Gives HUL more focused and stronger leadership

Deliver value to shareholders by way of direct ownership in both companies.

Nifty 50 Adjustments for the Spin-Off

Nifty will momentarily include KWIL at zero price (dummy symbol) for preserving index weightings. Once KWIL becomes public, placeholder will be replaced by real-time prices.

HUL's Q2FY26 Snapshot (Before the Demerger)

Profit After Tax: ₹2,685 crores (3.6% increase)

Revenue: ₹16,388 crores (1.5% increase)

EBITDA: ₹3,729 crores

EBITDA Margin: 23.2% (down 90 bps)

The company attributes the quarter's witnessing GST-related issues and erratic