Nuvama’s View on Kwality Walls Demerger and HUL Outlook

Nuvama expects Kwality Walls (KWIL), the demerged ice cream unit of Hindustan Unilever (HUL), to list in February at an estimated ₹50–55 per share, implying a valuation of ₹1,200–1,500 crore. The proposed listing would value KWIL at around 5x EV/sales, a discount to HUL’s 9x, reflecting its smaller scale and mid-single-digit EBIT margins recently impacted by weather. As a standalone entity, KWIL will be one of India’s few listed pure-play ice cream businesses, with ₹2,000 crore in revenue. It will benefit from the global innovation and brand strength of The Magnum Ice Cream Company, enhancing its competitive edge over local players. Nuvama highlights strong category tailwinds: the Indian ice cream market is expected to grow at ~15% CAGR through 2031, supported by improving cold chains and rising demand in tier-2/3 towns. The GST cut from 18% to 5% is a key catalyst, boosting affordability and accelerating the shift from unorganised to organised brands. The demerger allows focused management and strategy for KWIL, while HUL stands to gain 50–60 bps improvement in EBITDA margin post-exclusion of the unit. From Q3 FY26, ice cream will be reported as a discontinued operation. Nuvama maintains a ‘Buy’ rating on HUL with a target price of ₹3,195, seeing the demerger as value-accretive — offering investors dual exposure to a leaner, margin-enhanced FMCG giant and a high-growth dedicated ice cream business poised for formalisation and expansion.