A day after the scheme of arrangement (demerger) between Hindustan Unilever (HUL) and Kwality Wall’s became effective on December 1, 2025, Nuvama Institutional Equities has tagged Kwality Wall’s as a “good long-term play”.
The brokerage’s constructive view is backed by the recent goods and services tax (GST) cut on ice cream, a strong cold-chain and distribution network, and a premium brand portfolio supported by Unilever’s global innovation engine.
GST cut: A structural tailwind for affordability and market share gains
Nuvama sees the reduction in GST on ice cream from 18 per cent to 5 per cent as a significant structural positive for the category. Given that ice cream is largely an impulse purchase, the GST cut is likely to aid volume recovery — which stood at 6.5 per cent year-on-year (Y-o-Y) in H1FY26, against an 8.5 per cent compound annual growth rate (CAGR) over FY20–25 — and could push overall category growth above the estimated 11 per cent CAGR for FY25–30E. As a focused standalone entity, analysts expect Kwality Wall’s to respond faster to market opportunities, expand penetration and strengthen its leadership position.
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Strong distribution moat
Kwality Wall’s operates one of India’s largest cold-chain networks, with over 200,000 cabinets deployed across the country. Despite this scale, the network remains significantly underpenetrated compared to the 4–5 million outlets that stock carbonated soft drinks (CSDs), pointing to substantial expansion potential, noted Nuvama.
The company is already a leader in modern trade (MT) and e-commerce channels, which are growing faster than traditional retail. This distribution strength, combined with parent Unilever’s patented technologies and global innovation pipeline, provides Kwality Wall’s with a structural edge in driving penetration and premiumisation, according to analysts.
Premium portfolio and brand power to drive mix improvement
Kwality Wall’s brand portfolio includes Magnum, Cornetto and Walls, all backed by Unilever’s global research and development (R&D) and innovation capabilities. The company’s premium segment, which accounted for 12–15 per cent of sales in FY25, is expected to expand meaningfully to 18–22 per cent by FY31E, driven by new launches and a refreshed pack-price architecture aligned to India’s ₹10–₹50 snacking ladder.
This premiumisation strategy positions Kwality Wall’s to capture a larger share of India’s broader $26 billion snacking and soft drinks opportunity, where ice cream remains a relatively small but fast-growing category, believes Nuvama.
New leadership with deep FMCG and QSR experience
Kwality Wall’a is being led by Chitrank Goel as deputy managing director, who brings over 20 years of experience in foods, consumer packaged goods (CPG), quick service restaurant (QSR)/retail and snacking across India and Europe.
Additionally, Prashant Premrajka, CFO of Kwality Walls, has over 21 years of experience at Unilever, adding financial and operational depth to the leadership team, according to Nuvama.
Key challenges:
Despite its strengths, Kwality Wall’s faces several near-term challenges:
- High seasonality: Like carbonated drinks, beer and talcum powder, ice cream demand is highly seasonal, leading to uneven cash flows and capacity utilisation.
- Margin pressure: In FY25, Kwality Wall’s reported an Earnings before interest, tax, depreciation and amortisation (Ebitda) margin of 7.1 per cent, which compressed to breakeven in H1 FY26 — significantly below peers like Vadilal (18.5 per cent) and Havmor (17–18 per cent).
- Capex and working capital: Given the likely need to invest in more local manufacturing facilities and expand touchpoints (cabinets), clarity is needed on the company’s capex plans and cash position post-demerger.
Kwality Wall’s listing
Nuvama expects Kwality Wall’s stock to list in February at a likely valuation of around 5 times enterprise value to sales (EV/sales), implying a price band of ₹50–55 per share, a discount to parent HUL’s 9 times EV/sales multiple. Analysts remain positive on HUL and retain a ‘Buy’ rating with an unchanged target price of ₹3,200.
Disclaimer: View and outlook shared on the stock belong to the respective brokerages and are not endorsed by Business Standard. Readers discretion is advised.
