Hindustan Unilever eyes listing ice cream business by end of FY26

Hindustan Unilever (HUL) aims to complete the demerger of its ice cream business, Kwality Wall's India, and list the entity by the end of FY26, according to CFO Ritesh Tiwari, who told CNBC-TV18 that he expects the business to grow in size over the next 2-3 years as margins improve.

The move, announced earlier this year as part of a global restructuring by parent company Unilever, will see shareholders getting one share of Kwality Wall's India for every share of HUL they hold. The demerger is set to create India’s second-largest ice cream company.

The ice cream business is a capital-intensive one, with a distinct model that has low synergies with the rest of HUL’s business. Separating the business, Tiwari says, will ensure all shareholders will be able to participate in the growth story of ice cream in India.

“From manufacturing to distribution, it runs in cold chain, it is seasonal, and has higher capital intensity. It has low synergies because with all of the categories we do business with. So, if ice cream is run with a focus management, with different agile strategies which are suited to its own distinctive business model, it can unlock more growth going forward,” he added.

The demerged entity, Kwality Wall's India will house the brands Kwality Wall’s, Cornetto, Magnum, The Dairy Factory, and the demerger will see the HUL’s five ice cream factories, licenses, and cold storage logistics, all employees, inventory, and liabilities related to the business move to the new standalone entity.

According to data from the Indian Ice-Cream Manufacturers' Association (IICMA), the Indian ice cream market is valued at around Rs 30,000 crore today and is expected to grow to ₹45,000 crore in 3 years and reach ₹50,000 crore by 2028.

Currently, the ice cream business contributes ₹1,800 crore, or around 3% of HUL’s revenue, and delivers low single-digit EBITDA margins. The business is in an investment phase, with high capital expenditure requirements due to its nationwide presence and cold chain infrastructure.

“A typical FMCG (fast-moving consumer goods) business like HUL invests under 2% of turnover into capex. Ice cream requires 5–7%, sometimes more, to scale both manufacturing and distribution,” Tiwari said.

As the business scales and operating leverage kicks in, HUL expects margins to improve. “Our material margins are already industry-leading. It’s the fixed costs—like dedicated factories, trucks, cold storage, and cabinets—that weigh on overall margins,” he added. Over time, HUL expects margins to move into the higher single digits.

Massive potential for growth

Tiwari maintains that India’s ice cream consumption remains significantly under-penetrated. On average, an Indian consumes about 600 ml of ice cream annually. In metro cities, that figure is three to four times higher, but still far below developed markets such as the US, where per capita consumption stands at 13 litres.

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“This shows the massive headroom for growth,” Tiwari noted.

India’s ice cream industry has grown at a compounded annual growth rate (CAGR) of 11–12% over the last several years. Currently, ice cream is sold through over 2.5 lakh freezer cabinets operated directly or indirectly by HUL. Out of India’s 12 million retail outlets, only about one million stock ice cream—indicating a vast room to expand cold chain distribution.

“There is huge potential to expand cold chain distribution for ice cream. Today, we have access to 2.5 lakh ice cream cabinets. The whole agenda going forward is to expand that network. We will also need to expand production alongside distribution, and regionalising production is critical to reduce time and cost from factory to outlet,” Tiwari adds.

As Kwality Wall's India charts a growth path as a standalone entity, Tiwari says de-seasonalising the business is also one major area of focus, given that ice cream is typically consumed largely only in summer months. Tiwari said the company has worked steadily to reduce seasonality by positioning ice cream as both a dessert and a snack. A part of that, he adds, is to launch festive season-specific flavours to bring in more consumption occasions for the product.

Tiwari says that currently, a little less than half the business happens during peak season, and the balance of the business is spread across the remaining quarters. The scope of growth for the business will further accelerate growth, he adds.

“The industry has grown in double digits for the last one decade. Our own business for Kwality Wall’s has seen consistent double-digit growth, and with sharper focus going forward, we could see even stronger growth,” he adds.

The demerger also comes at a time when the market has seen increased activity from smaller direct-to-consumer (D2C) brands focused on low-calorie and health-focused offerings, many backed by venture capital. While there is no official data on market share, industry officials say Amul is the largest ice cream player in the country, followed by HUL.

Tiwari welcomed the competitive intensity, citing the low per capita consumption and need for infrastructure growth. “More players help expand the category and distribution,” he said, adding that innovation is a key battleground in ice cream. “It’s a high-innovation category—shape, flavour, format all matter to consumers. That’s where brand, R&D, and global tech matter.”

Demerger details

HUL will transfer the brand and technology rights for Kwality Wall’s, Magnum, and Cornetto to the new entity. A royalty contract—valid until 2028—will continue, covering brand trademarks, technical know-how, and innovation support.

“The demerged entity will retain access to Unilever’s global R&D and innovation pipeline. After global demerger and listing, a new royalty relationship may be explored. For now, we are equipping Kwality Wall's Ltd with full access to brand rights and are also providing technical know-how, innovation, and leadership from Unilever. This ensures continuity and competitiveness for the ice cream business,” Tiwari said.

Post separation, The Magnum Ice Cream Company, Unilever’s demerged global ice cream entity, will acquire a 61.9% stake in Kwality Wall’s (India) Ltd (KWIL) from the Unilever Group. Once KWIL is listed, Magnum will launch an open offer for public shareholders in accordance with SEBI regulations.

(Edited by : Vipal Durge)

First Published: Aug 8, 2025 1:01 PM IST

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