Analysts at DBS Group Research and Maybank Securities are keeping “buy” on Grab following its 1QFY2024 results release.
In their May 16 report, Maybank analysts highlight that Grab delivered another solid quarter, with a mid-teens to high-20% growth across its segments.
Net revenues, for one, grew 24% y-o-y on the back of 18% y-o-y gross merchandise volume growth (GMV). Grab’s robust delivery was mainly supported by the mobility segment wherein GMV/revenues grew 27% y-o-y, particularly helped by tourism and large corporate and social events.
Other segments also posted double-digit growth, alongside improved profitability, Maybank points out.
Grab’s adjusted ebitda of US$62 million ($83.55 million) was about 59% above consensus projection of US$39 million, DBS analyst Sachin Mittal highlights. The company also has increased its FY2024 adjusted ebitda guidance to US$250 million to US$270 million, while the revenue guidance is retained at 15% to 17%.
Moving forward, DBS projects a GMV CAGR of 12% over FY2023-FY2025, led by mobility and delivery. However, a rising delivery ebitda margins coupled with narrowing fintech losses and lower regional costs are likely to support much higher adjusted ebitda growth of 122%.
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“Fintech’s adjusted ebitda losses are projected to reduce significantly in FY2024. Grab’s adjusted losses are on a downward trajectory with the reduction in funding costs for the payment business while DigiBank [is set] to benefit from a reduction in marketing expenses and a rise in lending business,” says Mittal.
DBS is raising its target price for Grab to US$4.50 from US$4.08 previously. This stems from rolling forward its valuation by six months to an average of FY2024-FY2025. Mittal also revised its adjusted ebitda estimates in FY2024/FY2025 by 25%/27%.
Meanwhile, Maybank is keeping its target price at US$4.50.
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Shares in Grab closed 5 US cents higher or 1.39% up on May 16 at US$3.65.
