Hindustan Unilever Ltd. (HUL) is preparing for a significant step in its corporate restructuring as it spins off its ice cream division, Kwality Wall’s India, into a separate listed company. The price adjustment for HUL shares will take place during a special pre-open trading session on December 5, which has been officially designated as the record date to determine shareholders eligible for the demerger benefits.
Investors who hold HUL shares in their demat accounts as of this date will automatically receive shares of the newly created company. December 4 will be the final day of trading for HUL as a unified entity before the separation takes effect.
Demerger Structure and Share Allotment
As part of the approved demerger plan, shareholders will be allotted shares of Kwality Wall’s India in a 1:1 ratio, meaning every investor will receive one share of the spun-off company for each HUL share currently held.
On December 5, both stock exchanges will conduct a special price discovery session to determine the new market value of HUL after the separation. Once the adjusted price is finalised, revised futures and options (F&O) contracts reflecting the new structure will be introduced.
Why December 4 Is Critical for Shareholders
All existing derivatives contracts linked to HUL will expire at the close of trading on December 4.
Moreover, due to the current T+1 settlement rule, investors must purchase HUL shares on or before December 4 to qualify for the demerger entitlement. Any transaction made after this cutoff will not count for share allocation.
Impact on Market Indices
The demerger will also lead to temporary index adjustments across major domestic and global benchmarks.
- MSCI and FTSE will initially include Kwality Wall’s India at its discovered value on the record date. The stock will later be removed once official trading begins.
- Nifty and Sensex will add a zero-priced placeholder stock one day before the record date to represent the ice cream business until its formal listing.
The value of this dummy entry will be calculated as the difference between HUL’s last closing price before the record date and the price determined during the special session. If both values match or the discovered price is higher, the dummy stock will stay at zero until further price movements occur.
Expected Listing Window for Kwality Wall’s India
Kwality Wall’s India is anticipated to appear on exchanges within roughly a month, pending regulatory clearance. After listing, exchanges will monitor price behaviour before removing placeholder entries from indices.
- On the NSE, removal can occur after three trading sessions, provided the stock does not hit upper or lower circuits for two consecutive days.
- The BSE will follow a similar method but focuses only on lower circuit stability.
Summary
HUL will demerge its ice cream business, with December 5 set as the record date for share allotment and a special pre-open price reset. December 4 is the last chance for investors to qualify, as all existing F&O contracts will also expire that day. The spun-off entity, Kwality Wall’s India, will be listed separately within the next month, with index adjustments applied until its official market debut.
Disclaimer:
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