‘Clear leader’ in S-E Asia: Analysts bullish on Grab despite regulatory headwinds

[SINGAPORE] Analysts remain broadly optimistic about Grab following its first-quarter results.

The company reported a more than four times, or 466.7 per cent jump in earnings for Q1 2026 to US$136 million, from US$24 million in Q1 2025.

Brokerage firms presented a mixed outlook on target prices, citing a combination of strong operational execution and emerging regulatory headwinds in Indonesia.

Record growth in on-demand segments

Jefferies analyst Thomas Chong reiterated a “buy” rating on Grab, maintaining a target price of US$5.80. On Tuesday, Chong highlighted Grab’s “solid execution across segments”, noting that group revenue was 4 per cent ahead of consensus estimates.

Jefferies remains particularly encouraged by the resilience of the on-demand gross merchandise value (GMV), which grew 24 per cent year on year to US$6.1 billion.

Chong said that mobility Ebitda margins reached 8.9 per cent, slightly ahead of his estimates, while deliveries revenue outpaced consensus by rising 23 per cent year on year to US$510 million.

The brokerage also noted that financial services are on track to achieve segment adjusted Ebitda breakeven by the second half of 2026.

Attractive share price

Morningstar equity analyst Kai Wang maintained a fair value estimate of US$5.60 for the firm, viewing the current share price as attractive in a report on Tuesday. Revenue for the quarter was 3 per cent above Morningstar’s estimates at US$955 million.

Wang noted that while the mobility business has reaccelerated, Morningstar expects GMV growth in the “low teens” for the remainder of 2026. The delivery segment is projected to grow by 20 per cent this year, buoyed by the expansion of non-food delivery.

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“Given Grab’s clear leadership in South-east Asia, we believe it will have long-term pricing power for its services because there is a lack of substitutes in the region,” Wang stated.

Morningstar highlighted that Grab’s main rival, GoTo, saw its GMV grow by only 4 per cent this quarter compared with Grab’s 24 per cent organic growth, suggesting Grab is becoming the clear market leader across the region.

Indonesia regulatory headwinds

A point of contention for brokers is the recent directive from Indonesia’s President Prabowo to cap ride-hailing commissions for two-wheel (2W) services at 8 per cent, down from 20 per cent.

Jefferies noted that 2W services in Indonesia account for less than 6 per cent of Grab’s overall mobility GMV.

“We believe mobility unit economics can be maintained via strategic allocation for consumer and driver incentives,” Chong said.

Conversely, CGS International (CGSI) reiterated its “add” call but slashed its target price to US$4.50 from US$6.25. CGSI has conservatively baked in the 8 per cent commission cap from 2027 onwards and warned of “downside risks” if the cap is extended to four-wheel drivers or delivery services.

CGSI subsequently revised its FY2027 and FY2028 adjusted Ebitda estimates lower by 8 per cent and 7 per cent, respectively.

It also cites “value-destructive mergers and acquisitions, and higher-than-expected cost pressures” as downside risks.

Despite the regulatory overhang, CGSI remains positive on Grab’s “resilient GMV growth and manageable cost pressures,” noting that the company’s strong balance sheet allows it to defend market share against peers in the current macro high fuel-cost environment.

“Management highlighted that it is actively engaging with regulators while navigating broader macro headwinds, including elevated fuel costs. Despite this, Grab remains confident in the resilience of its mobility GMV growth, supported by ongoing optimisation of its artificial intelligence-driven marketplace and continued product innovation,” CGSI said.