Post-HUL demerger, Kwality Wall’s aims to become a ‘snacking’ firm

Kwality Wall’s (India) Ltd. “We are pioneering the transition of ice cream from leisure snacks or desserts to everyday frozen snacks. That’s what we plan to do,” Chitrank Goel, managing director (KWIL), said in an interview ahead of the company’s listing on stock exchanges on Monday. he said. It was spun off from parent company HUL in December.

The launch in India follows The Magnum Ice Cream Company NV’s separation from parent Unilever and listing on Euronext Amsterdam last month.

Kwality Wall’s wants to break the perception that ice cream is a summer snack and position its products as a year-round snack.

“When you make ice cream Dairy products, chocolate, complex layers, etc. you consume it throughout the year,” said Prashant Premrajka, chief financial officer, Kwality Wall’s. Mint.

This transformation could be fueled by the explosive growth of boom trade.

“This is where the channel shift of swing trading comes in. It’s an impulse category. Ice cream is the healthiest possible choice for me when I want a snack,” Premrajka said. But he added that about 60% of the company’s annual sales are concentrated in the summer months.

Global brands

Kwality Wall’s has three major brands in India today: Magnum, Cornetto and Kwality Wall’s. The Magnum Ice Cream Company is home to four of the top ice cream brands worldwide: Magnum, Ben & Jerry’s, Cornetto and Wall’s. Kwality Wall’s India management has said that the company is open to introducing some of these global ice cream brands to India.

“…whether it is Ben & Jerry’s, Yasso, Carte D’or, we will introduce them,” Goel said. “There is no set time [when] we will launch them, but we will definitely see a seamless flow of brands coming to India.”

Shares of Kwality Wall’s India are listed at: ₹29.90 on BSE on Monday, indicating market cap is above 29.90 ₹7,300 crore.

Before the demerger, ice creams accounted for around 3% of HUL’s turnover. ₹1,800 crore revenue. HUL reports extraordinary one-time earnings ₹4,516 crore was due to discontinued operations following the demerger of the ice cream business unit in the third quarter.

HUL shareholders will get shares in the new Kwality Wall entity (1:1 ratio). Following the transaction, The Magnum Ice Cream Company will control Kwality Wall’s, making it a direct subsidiary. An open offer is being made for the 26% shares held by Kwality Wall’s existing shareholders. ₹21.33 per share.

The demerger is a net positive for HUL investors, stock brokerage firm Nuvama Institutional Equities said in a Nov. 19 note.

“The demerger will give existing investors direct ownership in pure ice cream business worth approximately INR 20 billion [ ₹2000 crore] a strong 15-20% CAGR in revenue [compound annual growth rate] “The segment has historically delivered healthy EBIT,” Nuvama said, “potential and a portfolio of iconic brands such as Magnum, Cornetto and Kwality Wall’s [earnings before interest and tax] margins 5-9%. [The] division [the] “The ice cream business will create a list-leading ice cream company in India with focused management, with greater flexibility to implement strategies suited to its unique business model and market dynamics, thus realizing its full potential.”

Nuvama analysts added that India’s ice cream market is likely to grow at a CAGR of 15% by 2031. Competing ice cream companies listed in India include Vadilal Industries, which has a market capitalization of just over 200,000. ₹Owner of Arun Ice Cream, market capitalization of over 3,700 crore and regional dairy company Hatsun Agro, over 200,000 crore ₹20,000 crore.