The average target price of GRAB is 6.4 and suggests 29% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 8.0. This translates into 61% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 5.1. This suggests 3% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

Grab Holdings Limited provides superapps that allows access to mobility, delivery, financial services, and enterprise offerings through its mobile application in Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. The company is headquartered in Singapore.

Singapore

Grab Holdings Limited

Technology

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

GRAB reported revenue of USD 2 917mn in the last 12 months, up 4% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. Market expects EPS to reach USD -0.03 in FY25.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). The stock has outperformed this peer group by 4ppts over past six months and grown 2ppts slower in the past month. At the same time, the stock's performance relative to its the peers from the same country and sector is different. It underperformed these peers by 3ppts over six months and grew 9ppts slower in the past month. With respect to the stock's valuation against its peers, its overall price performance is neutral.

The company has reported very poor EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 6.3% in the last 12 months, up from -12.5% in FY23. 

Historically, GRAB has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 0.8%, a growth from -19.0% in FY23. 

In the last 12 months, the return on capital employed (RoCE) grew to 0.3%, below the peers. The consensus estimate for FY24 for RoCE is -1.2%, again behind the peers. 

Another important profitability metric, return on assets (RoA), amounted to 0.3% in the last 12 months, an increase from -5.0% in FY23. The market analysts predict that RoA will be -1.0% in FY24, again weaker than its peers. 

Grab Holdings Limited reported a return on equity (RoE) of 0.4% in the last 12 months, up from -6.9% in FY23. The market consensus projects an RoE of -1.4% in FY24, again behind its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -2.8 in the past several years. This ratio implies a fragile shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

GRAB boasts very high trading liquidity. The average private investor can sell his common position in the stock immediately. Liquidity is usually very stable and remains mildly favourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. 

No other major risks have been identified.

The risk of default is moderate. We note resilient historical revenue growth, low margin volatility, solid cash flow generation, and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to bleak profitability, negligible return on capital, and inadequate interest coverage.

In highly turbulent market conditions, GRAB is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, GRAB is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from critical to immense. 

Based on key historical and expected multiples, the stock is greatly overvalued relative to its peers. Specifically, the stock is 'expensive' on P/E, overvalued on EV/EBITDA, reasonably priced on P/FCF. 

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Grab Holdings Limited

$ 4.8

2

Grab Holdings Limited

$ 4.8

2

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Profitability factor

Risk / Profitability

Risk factor

Profitability factor

$ 4.8

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