Paytm was the first to introduce a speaker called Paytm Soundbox in 2019, providing users with an audio confirmation of their UPI payments. While Paytm enjoyed a monopoly in this space initially, competitors such as PhonePe, BharatPe, Google, and even banks like HDFC Bank, State Bank of India, and IndusInd Bank have entered the market with their own versions of payment confirmation speakers. This has raised questions about Paytm’s market share and the impact of increased competition.

Despite the entry of these players, BofA Securities believes that Paytm will continue to benefit from its early-mover advantage. According to the brokerage, there is still room for two to three new players to coexist and target new merchants, ensuring competition remains rational. BofA Securities estimates that there are 40-45 million merchants in India, out of which around 2.5 million are large merchants and the rest are small and medium-sized enterprises (SMEs). As banks and point of sale (PoS) companies primarily serve large merchants, the target market for these payment confirmation devices is largely the SMEs.

BofA Securities predicts that Paytm will add 15 million new customers for Soundbox over the next 2-3 years. While PhonePe and BharatPe are currently seen as more aggressive competitors, instances of offering free Soundbox to poach merchants have reduced due to the lack of economic feasibility. Paytm charges around INR 100 per month for the subscription, providing high visibility on subscription revenue. The brokerage expects Paytm’s EBIT margins to reach around 40% in a steady state, with a payback period of 12-14 months for each Soundbox.

In its latest research note, BofA Securities upgraded its rating on Paytm shares to ‘buy’ and increased the price target to INR 1,020, indicating an upside of over 21%. The brokerage highlighted Paytm’s ability to customize its devices and maintain inventory, which reduces supply chain risks. Paytm manufactures Soundbox in India, allowing for faster launch of variants.

While PhonePe and BharatPe, Paytm’s major competitors in this segment, may not face the same pressure to generate immediate profits as they are not listed companies, they can disrupt the market by offering higher discounts. However, BofA Securities expects Paytm to sustain steady growth in this segment and other verticals due to its rising contribution from high-margin businesses and cost-control initiatives.

Paytm was the first to introduce a speaker called Paytm Soundbox in 2019, providing users with an audio confirmation of their UPI payments. While Paytm enjoyed a monopoly in this space initially, competitors such as PhonePe, BharatPe, Google, and even banks like HDFC Bank, State Bank of India, and IndusInd Bank have entered the market with their own versions of payment confirmation speakers. This has raised questions about Paytm’s market share and the impact of increased competition.

Despite the entry of these players, BofA Securities believes that Paytm will continue to benefit from its early-mover advantage. According to the brokerage, there is still room for two to three new players to coexist and target new merchants, ensuring competition remains rational. BofA Securities estimates that there are 40-45 million merchants in India, out of which around 2.5 million are large merchants and the rest are small and medium-sized enterprises (SMEs). As banks and point of sale (PoS) companies primarily serve large merchants, the target market for these payment confirmation devices is largely the SMEs.

BofA Securities predicts that Paytm will add 15 million new customers for Soundbox over the next 2-3 years. While PhonePe and BharatPe are currently seen as more aggressive competitors, instances of offering free Soundbox to poach merchants have reduced due to the lack of economic feasibility. Paytm charges around INR 100 per month for the subscription, providing high visibility on subscription revenue. The brokerage expects Paytm’s EBIT margins to reach around 40% in a steady state, with a payback period of 12-14 months for each Soundbox.

In its latest research note, BofA Securities upgraded its rating on Paytm shares to ‘buy’ and increased the price target to INR 1,020, indicating an upside of over 21%. The brokerage highlighted Paytm’s ability to customize its devices and maintain inventory, which reduces supply chain risks. Paytm manufactures Soundbox in India, allowing for faster launch of variants.

While PhonePe and BharatPe, Paytm’s major competitors in this segment, may not face the same pressure to generate immediate profits as they are not listed companies, they can disrupt the market by offering higher discounts. However, BofA Securities expects Paytm to sustain steady growth in this segment and other verticals due to its rising contribution from high-margin businesses and cost-control initiatives.