India’s leading FMCG company, Hindustan Unilever Ltd. (HUL), has decided to demerge its ice cream business.
HUL to Spin Off Ice Cream Business, Creating New Listed Entity with Rs 2,000 Crore Sales
The board of directors of the Mumbai-headquartered fast moving consumer goods (FMCG) company decided on Monday that the ice cream division – represented by its master brand Kwality Walls will be separate listed entity.
This announcement has generated enthusiasm among a section of the stakeholders, the country’s ice cream market is set to witness a new decided player in the fray, which happens to be one of the largest in the field. With some Rs 2,000 crore yearly sales, the business is already one of the largest ice cream business in India.
HUL’s Ice Cream Business Set for Growth Post-Demerger, Aims for Greater Flexibility and Market Potential
The ice-cream business, as per analysis by Nuvama Institutional Equities, has a growth potential of 15-20% CAGR and boasts EBIT margins of 5–9%. On the contrary, competitor Havmor’s posted sales worth Rs 1,030 crore in FY24, while its EBITDA stood at Rs 180 crore and had an EBIT margin of 11.2%.
As per the Executive Director at Nuvama, Abneesh Roy, the move “will allow more flexibility focused management for the ice cream business”.
He said that this demerging of ice cream business would rather create a leading listed ice cream company in India, which will have a focused management with greater flexibility to deploy strategies suited to its distinctive business model and market dynamics thus realising its full potential.
This move by the company came after the decision by its London-based parent Unilever Plc.’s 19th March decision to separate the ice cream business globally and cutting its overall workforce by 7,500.
