S&P Global Ratings has on Wednesday upgraded Grab Holdings to ‘BB’ from ‘BB-‘ on improving earnings quality with positive outlook.
The rating agency said in a note that it expects Grab to improve its earnings quality over the next 12-18 months because it will remain dominant in Southeast Asia’s mobility and delivery industry.
“We believe the cash position of the Singapore-based company will become more robust owing to higher operating leverage and disciplined spending on growth,” it said.
The positive outlook also reflects its expectation that Grab will maintain its dominant position as Southeast Asia’s top mobility and deliveries platform operator over the next 12-18 months.
It is noted that Grab has established a record of leadership in the mobility and deliveries sectors in key Southeast Asia markets.
This, along with a rise in Grab’s recurring user base and less-aggressive competition, will boost its business position.
S&P expects Grab to maintain its on-demand take rate at 13 percent to 15 percent in 2026 and 2027, versus 13.6 percent in 2025.
The company’s food delivery and mobility segment should grow steadily in 2026 and 2027, in its view.
“Grab will also continue to invest in financial services, particularly in digital banking, during this period,
“That said, we expect financial services’ contribution to Grab’s revenues to remain modest,” it noted.
It forecasts the company’s revenue will grow 20 percent in 2026 to $4.1 billion, and about 10 percent annually thereafter.
Meanwhile, S&P said Grab’s earnings before interest, taxes, depreciation, and amortization (EBITDA) margin will continue to improve, reflecting operating efficiencies and greater economies of scale.
Profitability metrics will also improve as Grab’s financial services business achieves breakeven, likely by the end of 2026.
“We forecast its EBITDA margin at 17 percent to 18 percent in 2026 and 2027, compared with 11.2 percent in 2024, and our estimate of about 17.3 percent in 2025,” said the rating agency.
It believes Grab will maintain a sufficient financial cushion, considering an unrestricted cash balance of about $6.6 billion as of end-2025.
“This is because we anticipate the company will generate positive free cash flows since its mobility and delivery services businesses have low investment requirements,” it explained.
S&P also expects Grab to direct a proportion of its cash flows to its financial services business.
In its base case, S&P expects Grab’s ratio of debt to EBITDA to trend closer to 3 times by 2027, from about 4 times in 2025.
An expanding earnings base and limited external debt will lead to steady improvement in the company’s credit metrics, it added.
S&P does not net-off Grab’s available cash surplus against gross debt because it believes maintaining a sizable cash surplus allows players like the company to be nimble and meet any sudden investment requirements.
This also considers Grab’s financial services business, which has a short track record and is yet to demonstrate asset quality over a long economic cycle and in different markets.
However, it noted a fast-growing loan book and event risks could erode the company’s cash surplus and lead to volatility in credit metrics.
Having said that, S&P does envisage a scenario wherein Grab’s credit metrics could strengthen beyond what is reflected in its base case.
“This could happen if (1) the company repays its $1.5 billion outstanding convertible bond, leading to a material reduction in gross debt and its debt-to-EBITDA ratio falls below 2 times sustainably; or (2) if we net-off Grab’s available cash surplus against debt, resulting in a net cash position in S&P Global Ratings-adjusted terms, as its business position strengthens,” it explained.
S&P expects Grab to maintain its measured approach toward potential acquisitions and shareholder distributions.
It estimates it will spend up to $600 million annually toward shareholder distributions and acquisitions in 2026 and 2027.
It is noted that Grab has recently acquired a 50.1 percent stake in Stash Financial, a U.S.-based digital investing platform.
This is Grab’s first material acquisition since its takeover of Uber Technologies Inc.’s southeast Asia business in 2018.
The company has also announced a $500 million share buyback program that we expect to be completed within 2026.
“However, should Grab consume its cash reserves for a large-scale acquisition or investment, we would reassess its business competitiveness and whether any incremental business improvement compensates for potentially higher leverage,” said S&P.
Overall, the positive outlook reflects the rating agency’s expectation that Grab will maintain its dominant position as Southeast Asia’s top mobility and deliveries platform company over the next 12-18 months.
This will help the company maintain positive EBITDA and cash flows during this period.
“The outlook also reflects our view that Grab will maintain a conservative approach toward leverage management,” said S&P.
It noted that it may revise the outlook back to stable if Grab’s EBITDA or cash flow starts to deteriorate, signaling a weakness in its business competitiveness.
This could happen because of heightened competition or Grab adopting more aggressive tactics to boost or defend market share.
A decline in gross merchandise value, take rate, or the number of monthly transacting users, or rising incentive spending could signal such deterioration, said S&P.
A material reduction in the company’s liquidity buffer could also put downside pressure on the rating.
“We could raise the rating if Grab continues to strengthen its operational competitiveness, improves its EBITDA, operating cash flow, and profitability, and also keeps leverage at a prudent level,
“The debt-to-EBITDA ratio remaining below 2 times on a sustained basis could indicate such improvement,” it added.
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