Hindustan Unilever falls up to 7% as stock adjusts for Kwality Wall's ice-cream business spin-off

Hindustan Unilever

The shares of Hindustan Unilever (HUL) adjusted to the demerger of its ice-cream business, Kwality Wall's (India) on December 5. After a special pre-open session, the stock was discovered at Rs 2,422 apiece.

This is nearly 2 percent lower that its previous closing price of Rs 2,462.20 apiece. After opening, the stock sharply fell around 7 percent to hit a low of Rs 2,286.70 per share. The stock then recovered some losses to close at Rs 2,341 per share.

About HUL-Kwality Wall's demerger:

Earlier in November 2024, HUL approved the demerger of the ice cream business, which operates popular brands including 'Kwality Wall's', 'Cornetto' and 'Magnum'. National Company Law Tribunal (NCLT) approved the demerger scheme on October 30.

The ice cream business forms 3 percent of HUL's total yearly turnover, contributing Rs 1,800 crore to the total revenue.

ICICI securities said that the ice cream business will likely be valued at Rs 9,500 crore ($1.06 billion) to Rs 11,900 crore. It values per share of the upcoming demerged entity at Rs 40-50.

Demerger ratio:

The share entitlement ratio has been set at 1:1. This means that every shareholder of HUL will receive one share of the ice cream business for every share of the FMCG major they own, as on the record date

Record date:

The allotment date was fixed at December 29. The record date to determine the eligibility of the shareholders set to receive the free shares was set on December 5. This means that those HUL shareholders whose names appear in the register of members as on the record date will be entitled to receive free shares of KWIL as part of the demerger.

When will KWIL shares debut on stock exchanges?

HUL said the process of allotment, credit and listing of the demerged Kwality Wall's India shares will be undertaken in due course of time. According to market regulator SEBI's rules, the shares of the demerged entity will need to be listed within 60 days from NCLT's approval of the demerger scheme.

Kwality Wall's shares to be added to Nifty 50:

The National Stock Exchange (NSE) on November 28 had announced that Kwality Wall's India will be included in the Nifty 50 index from December 5. The stock exchange will conduct a special pre-open session for HUL on December 5, ahead of the FMCG major’s planned demerger of its ice-cream business into Kwality Wall’s India.

As part of the index adjustments, the demerged entity will be briefly added to 35 Nifty indices at a zero price, using a dummy symbol 'DUMMYHDLVR'.

Follow all LIVE updates from the stock markets here.