Domestic fast moving consumer goods (FMCG) companies could benefit from the multinational companies' aggressive push on margin expansion, according to a report by Credit Suisse.

Based on the recent trend of activist investors trying to push global staples companies to alter strategy towards generating greater shareholder returns by focusing on margin expansion, Credit Suisse said this opens up opportunities for domestic companies. “The recent spate of activist investor pressure has pushed global staple companies to set aggressive margin expansion targets. The gainers will be domestic companies which directly compete with MNCs,“ said the Credit Suisse report authored by Arnab Mitra and Rohit Kadam.

Private equity owners delivered 800-basis-point margin expansion after they acquired Heinz in 2013. This was followed up by merging Kraft and Heinz to driver further synergies. Unilever with margin expansion of 360 bps in four years and Mondelez with 150-270 bps margin growth in two years seem to have the most aggressive margin expansion targets. Nestle's target of 150-250 bps expansion over four years is relatively modest, according to the report.

The Indian listed subsidiaries of MNCs may lose out on growth opportunities in the medium term if they focus too much on margins. Nestle India's margin is at a ten-year-low and can have more scope for upside surprise. Godrej Consumer, according to Credit Suisse, can potentially gain as its India and Indonesia businesses competes with MNCs. This gain can be of market share or higher margins and can lead to a potential 4-7 per cent upside to FY19-20 earnings.