Explained: Why Kwality Wall's remains in the NIFTY50 index despite demerger and low market cap

Kwality Wall's (India) made a disappointing stock market debut today on NSE and BSE. Kwality Wall's stock listed at ₹29.80 apiece on the NSE compared to its discovered price of ₹40.20 per share, down 25.8%. On BSE, the stock listed at ₹29.90 per share, a discount of 21.6% over the indicative price of ₹38.15 per share.

As of 12:45 pm, Kwality Wall's (India) shares are trading ₹30.50 per share on NSE, with market cap of around ₹7,166 crore. Meanwhile, Hindustan Unilever shares are trading at ₹2,310 apiece, up 0.2%.

Parent company Hindustan Unilever announced the demerger of Kwality Wall's business last year. HUL had set an entitlement ratio of 1:1 for this demerger, with means HUL shareholder with 1 share will receive one share of 1 share of demerged Kwality Wall's stock.

Kwality Wall's operates the ice cream business through popular brands like Cornetto, Magnum and many others. The company roughly contributes 3% to 4% or ₹1,800 to ₹1,850 crore to HUL’s total revenue.

Why did Kwality Wall's made weak debut?

As per market experts, Kwality Wall's (India) made weak market debut reflecting investors caution to the ice cream business which is seasonal in nature. In India primary driver of ice cream sales is intense summer heat. Indian consumer association ice cream as a cooling, summer-exclusive treat to combat temperatures. As a result more than 60% of the industry sales comes between March to June summer season.

Besides this intense competition in the domestic ice cream market from Amul, Naturals and other regional brands may have also impacted investors sentiments weak towards Kwality Wall's (India). Ice cream business is also highly capital intensive with high inputs cost required for operating cold-chain logistics.

Hindustan Unilever received National Company Law Tribunal (NCLT) approval for the Kwality Wall's demerger scheme in October 2025 after which the record date to determine eligible shareholders and facilitate price discovery was on December 5.

Why Kwality Wall's shares still part of the NIFTY50 index?

After making weak stock market debut Kwality Wall's shares still continue to remain part of key benchmark indices like NIFTY50 and SENSEX 30 despite very low market capitalisation of around ₹7,100 crore.

Experts say as per NSE revised indices methodology, the demerged entity continues to remain part of benchmark indices to ensure continuity and prevent forced sell-off by passive funds and ETFs that track NIFTY50 index. This reduces the forced and immediate sell-off impact on the stock prices of new entity and market volatility also remains stable.

Also, keeping the demerged entity as part of the index helps reflect the combined market value of both parent and new entity. Meanwhile, the demerged entity stays in the index until the next index review. NIFTY50 rebalancing happen semi-annually, with next review occurring in March 2026. Hence, Kwality Wall's stock will remain as part of the NIFTY50 index at least till next review. In fact NIFTY50 currently has 51 constituents after the addition of Kwality Wall's stock.