Grab Holdings: Expect market share gains with the exit of key players
- Better-than-expected results in 1Q25, led by deliveries margins
- Our analysis indicates that the Grab-GoTo merger could add USD0.53 to our TP; we assign a 50% probability of the merger in FY25F lifting our TP by ~5%.
- Upgrade to BUY with a revised TP of USD5.68; we expect improvements in profitability and market share gains from exit of smaller players
1Q25 group adj. EBITDA of USD106mn 10% above consensus. In 1Q25 (Dec YE), Grab Holdings (GRAB) recorded group adj. EBITDA of USD106mn (+71% y/y, +9.3% q/q) vs. the consensus estimate of USD96mn. Adj. EBITDA excluding the fintech segment came at USD136mn (+51% y/y, +9.7% q/q), above the consensus’ estimate of USD124mn due to improved profitability in the deliveries segment and lower regional corporate cost.
The mobility segment’s adj. EBITDA was USD159mn (+15% y/y, +3.9% q/q), in line with the street’s expectation of USD159mn. Mobility recorded adj. EBITDA as a % of GMV of 8.8% in 1Q25 (8.9% in 1Q24, 8.4% in 4Q24) vs. the consensus of 8.7%. Meanwhile, deliveries adj. EBITDA was USD63mn (+50% y/y, +11% q/q), +9.8% above the street’s expectation of USD57mn, primarily driven by increased contributions from advertising and improvements to operating leverage. Deliveries adj. EBITDA as a % of GMV in 1Q25 was 2.0% (1.6% in 1Q24, 1.8% in 4Q24) vs. consensus of 1.8%.
Grab’s on-demand GMV (mobility plus deliveries) of USD4,933mn (+16% y/y, -1.9% q/q) was slightly above the consensus expectation of USD4,924mn. Fintech adj. EBITDA losses widened by +7.1% y/y and +11% q/q to USD30mn, +6.4% higher than the street’s expectation of (USD28mn). Regional corporate costs narrowed by -5.5% y/y (-1.1% q/q) to USD86mn due to deferred spending on certain line items due to seasonal timing, amid continued optimisation of the fixed cost structure. Fintech continues to see increased contributions from GrabFin and Digibank, with total loans disbursed growing 30% y/y to USD630mn in 1Q25. Customer deposits across Singapore and Malaysia’s digital bank businesses reached USD1.4bn as of 1Q25.
Grab raised its FY25F group adj. EBITDA to be between USD460-480mn, ~1% above consensus and -1% below our estimate. For FY25F, Grab raised its group adj. EBITDA to be between USD460-480mn from the previous guidance of USD440-470mn, a 50% increase from USD313mn in FY24, ~1% above the consensus estimates of USD465mn. Grab reiterated its FY25F revenue growth of 19-22% and expects to come in the range of USD3.33-3.40bn, with the mid-point of the guidance being in line with the consensus expectation of USD3.35bn. Regarding the USD500mn share buyback programme, as of 1Q25, a balance of USD274mn out of the previously approved USD500mn share repurchase program remained available to be deployed as Grab did not repurchase any shares during the quarter.
Grab-GoTo merger could be a key catalyst for upside potential. We estimate that a potential Grab-GoTo merger could add ~USD0.53 per share, representing a 10 uplift to our previous TP of USD5.16. We Incorporate a 50% probability of the deal materialising in FY25F to our TP which adds USD0.27 per share to our TP. The primary value driver post-merger would be enhanced profitability in the on-demand segments, underpinned by margin improvement. GoTo on-demand adj EBITDA to GMV is projected to be 1.3% by the street in FY26F vs our projection of 3.3% for Grab in FY26F. We see a case for GoTo’s margins to rise to 3.3% in FY26F due to the synergies led by cost-cutting and higher take-rates. This implies USD230m additional EBITDA in synergies which is 24% of the merged entity’s projected adj EBITDA of USD936m. We estimate USD130mn adj EBITDA is required to make the merger neutral for Grab. However, potential merger could add USD230m adj EBITDA synergies or USD100m more than the threshold for the merger.
Potential economic slowdown to be offset by market share gains. Grab’s share price has declined by ~15% since the announcement of tariffs on 2 April 2025 and another ~16% YTD from growing concerns about the demand outlook amid potential macroeconomic weaknesses in regional economies. Despite these concerns, we note that potential softness can be offset with market share gains. We expect Grab’s delivery gross merchandise value (GMV) to grow by 14% y/y in FY25F (vs. an estimated market growth of 10%), while the mobility growth is expected to be 18% y/y in FY25F (vs. estimated market growth of 15%), reflecting an assumed slowdown in Indonesia, the impact from the earthquake in Thailand, and seasonality.
Affordable product launches to support customer and GMV growth. Grab disclosed at a live-streamed event that it will roll out “GrabFood for One” across ASEAN, which will offer affordable meals with no small-order fees and reduced delivery fees. Grab also unveiled its “Shared Saver” product, where users can view and join active orders from others in their vicinity, effectively reducing delivery fees for each customer. Grab plans to achieve these lower delivery costs by order batching.
Successful execution on affordable products should help expand Grab’s customer base, as its current 40mn On-demand MTUs imply an only ~6% population penetration in Southeast Asia. However, ride-hailing penetration in the US in 2024 was ~30% while food delivery penetration was ~20%. GRAB’s on-demand MTU has increased y/y by an average of 19% from 1Q24 to 4Q24. We project Grab's on-demand MTU to see 16% CAGR to rise from 40mn in 2024 to 62mn in 2027. This would represent ~9% population penetration in Southeast Asia in 2027, assuming a 1% annual population growth in the region during that period. Grab also plans to introduce Dine-out Discovery in May 2025, which is powered by GrabMaps to help users discover restaurants in a certain area.
Capturing a higher percentage of traveller spend with the Travel Pass. Grab has launched Travel Pass, which offers travellers to ASEAN a bundle of discounts and promotions on mobility, food delivery, and dining out. For instance, for a fee of PHP49 (<USD1), Grab Philippines offers a PHP200 voucher for advance bookings, two vouchers for 20% off airport rides, seven vouchers for 8% off Grab rides, seven PHP80 vouchers for a GrabFood order, and three vouchers for 15% off dine-out deals. Grab also announced the Advance Booking (Airport Pickup) feature, which enables users to input their flight information, according to which Grab would adjust a driver's schedule, based on real-time flight status. These products and features enable Grab to capture a higher percentage of spending of the high-value traveller segment.
AI-powered tools for merchants and drivers. AI Merchant Assistant can quickly answer merchants' operating questions and provide them personalised solutions while also proactively reaching out to merchants to provide curated suggestions to help them increase business based on the latest performance. AI Driver Companion Features utilise historical and real-time data to guide drivers to find areas with high demand, which improves Grab's fulfilment rate.
Grab stands to benefit from the recent market exits of two key competitors in Southeast Asia. Delivery Hero’s Foodpanda will cease operations in Thailand effective 23 May 2025, as part of a regional strategy shift, while Gojek (GoTo Group) exited Vietnam on 16 September 2024 to streamline focus on higher-growth markets. These developments materially reduce competitive intensity in two of Grab’s core geographies, potentially improving unit economics and strengthening its market share in both Thailand and Vietnam.
Further upside potential if a Grab-GoTo merger materialises. Grab’s on-demand segment stands to benefit from more rational competition, while its fintech business could gain from deeper integration with the Tokopedia-TikTok Shop ecosystem. Indonesia already enforces floor and ceiling pricing for ride-hailing (IDR3,500-6,000/km in Java, Bali, and Sumatra, and IDR3,700-6,500/km in other regions), with similar caps for motorcycle taxis, which are particularly higher in Greater Jakarta. These measures curb predatory pricing and improve driver economics, fostering a more disciplined competitive landscape. This environment may support margin expansion and shift focus to service quality and profitability. On the fintech front, Grab is well positioned to leverage Indonesia’s e-commerce growth by embedding financial services such as buy-now-pay-later, cash microloans, and insurance within the Tokopedia-TikTok ecosystem. A combination of regulatory tailwinds and platform synergies could enhance Grab’s path to profitability and long-term growth in Indonesia.
We expect adj. EBITDA at USD495mn (+58% y/y), with a stronger lift from the deliveries segment. We expect delivery adj. EBITDA-to-GMV margin to expand to 2.3% in 2025 (from 1.7% in 2024), with more rational competition expected with the exit of key players in different markets, scale expansion, and ramp-up of new margin-accretive initiatives. We assume the mobility margin would
remain largely stable at 8.7% (+13bps), given the impact of a shift in mix and reinvestments in select markets with higher competition. For financial services, we expect adj. EBITDA losses to improve as Grab scales its loan books in its Digital Banks in Singapore and Malaysia. As such, we expect losses to narrow to USD96mn in FY25F from USD105mn in 2024.
Upgrade to BUY with a revised TP of USD5.68. Our revised TP mainly stems from rolling forward our valuation by 4-months, lifting our TP by ~5%. While another ~5% uplift to our TP comes from assuming a 50% probability of Grab-GoTo merger to go through in FY25F. A 100% probability of merger might lift our TP to USD5.94. We peg on-demand business at 21x 12-month forward EV/EBITDA (prev. 21x) at a 15% premium to Uber’s multiple, as Grab offers a 31% adj. EBITDA CAGR vs. Uber’s 24% over FY25F-27F. We value fintech at 4.6x 12-month forward revenue compared to the peer average 3.7x, as GRAB’s Fintech segment offer a revenue CAGR of 23% over FY25F-27F vs. the peer average CAGR of 7%. Overall, including fintech, Grab exhibits a 47% adj. EBITDA CAGR over FY25F-27F compared to Uber’s 24%.
Our bull-case TP for Grab is USD6.64, with the following assumptions:
- Excluding fintech, Grab will reach a 12-month forward adj. group EBITDA of USD721mn at 3.3% of GMV (vs. 3.1% in the base case), led by a sharper rise in delivery margins
- We assume Grab-GoTo merger will add EV of USD2,100mn (100% probability) or USD0.53 per share
- A key driver is the potential expansion in deliveries adj. EBITDA as a % of GMV to 2.6% (vs. 2.4% in the base case)
- 12-month forward financial services revenue will rise by 56% to USD512mn under both the bull and base cases
- For mobility, 12-month forward adj. EBITDA as a % of GMV is at 9.6%, vs. 8.7% under the base case
- 12-month forward EV/EBITDA of 22x for on-demand (vs. 21x under the base case)
- 12-month forward EV/revenue for financial services of 6.0x on revenue of USD512mn (vs. 4.6x under the base case)
Our bear-case TP for Grab is USD4.59, with the following assumptions:
- Excluding fintech, Grab will reach 12-month forward adj. group EBITDA of USD524mn at 2.5% of GMV (vs. 3.1% in the base case), led by irrational competition
- We assume Grab-GoTo merger does not proceed.
- A key driver is the potential contraction in delivery adj. EBITDA as a % of GMV to 1.9% (vs. 2.4% in the base case)
- 12-month forward financial services revenue will rise by 56% to USD512mn under both the bear and base cases
- For mobility, 12-month forward adj. EBITDA as a % of GMV is at 7.0%, vs. 8.7% under the base case
- 12-month forward EV/EBITDA of 20x for on-demand (vs. 21x under the base case)
- 12-month forward EV/revenue for financial services of 4.6x on a revenue of USD512mn (vs. 4.6x under base case)
| FY Dec | 1Q2024 | 4Q2024 | 1Q2025 | % chg yoy | % chg qoq |
|---|---|---|---|---|---|
| Revenue | 653 | 764 | 773 | 18.4 | 1.2 |
| Cost of Goods Sold | (394) | (432) | (449) | 14.0 | 3.9 |
| Gross Profit | 259 | 332 | 324 | 25.1 | (2.4) |
| Other Oper. (Exp)/Inc | (334) | (330) | (345) | 3.3 | 4.5 |
| Operating Profit | (75.0) | 2.00 | (21.0) | (72.0) | (1,150.0) |
| Other Non Opg (Exp)/Inc | 0.00 | nm | |||
| Associates & JV Inc | 0.00 | nm | |||
| Net Interest (Exp)/Inc | (23.0) | 12.0 | 44.0 | nm | 266.7 |
| Exceptional Gain/(Loss) | (4.00) | (3.00) | 1.00 | nm | (133.3) |
| Pre-tax Profit | (102) | 11.0 | 24.0 | nm | 118.2 |
| Tax | (13.0) | 0.00 | (14.0) | 7.7 | |
| Minority Interest | (11.0) | (16.0) | (14.0) | (27.3) | (12.5) |
| Net Profit | (126) | (5.00) | (4.00) | 96.8 | (20.0) |
| Net profit bef Except. | (122) | (2.00) | (5.00) | 95.9 | 150.0 |
| EBITDA | (35.0) | 38.0 | 19.0 | nm | (50.0) |
| Margins | |||||
| Gross Margins (%) | 39.7 | 43.5 | 41.9 | ||
| Opg Profit Margins (%) | (11.5) | 0.3 | (2.7) | ||
| Net Profit Margins (%) | (19.3) | (0.7) | (0.5) |
Source: DBS, Company
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