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Investing.com -- Moody’s Ratings has raised the corporate family rating (CFR) of Grab Holdings (NASDAQ:GRAB) Inc to Ba3 from B1 on May 30, 2025. The rating agency has also maintained a positive outlook for the Singapore-based ride-hailing and delivery services company.
The upgrade in Grab’s CFR to Ba3 is a reflection of its improving credit quality, according to Yu Sheng Tay, Assistant Vice President and Analyst at Moody’s Ratings. The company’s leading market position, alongside disciplined cost management, is expected to drive a growth in scale and earnings in the coming 12-18 months.
Despite uncertainties around tariffs and geopolitical tensions causing a decline in consumer sentiment, Tay emphasized that the resilience of Grab’s business model provides stability to its earnings and cash flow generation. The company’s substantial cash holdings are also seen as a buffer against unexpected demand shocks and a support for its ability to seize inorganic growth opportunities.
Grab has been strengthening its position as a leading provider of ride-hailing and delivery services in Southeast Asia, capitalizing on the region’s long-term structural growth. In the first quarter of 2025, Grab reported double-digit growth in key operating metrics such as monthly transacting users, on-demand gross merchandise value, and its loan book.
The company’s cautious financial policies strike a balance between growth and sustaining profitability through disciplined cost management. This approach has supported continued improvements in earnings and free cash flow generation.
Despite slower economic conditions affecting business and consumer sentiment, Grab’s business model is expected to maintain a degree of stability. In a downturn, the company could redirect incentive spending toward consumers to boost demand, thereby supporting stable earnings and cash flow generation.
Grab’s adjusted EBITDA is expected to increase to around $300 million in 2025 and $450 million in 2026, up from $163 million in the 12 months ended March 2025. Free cash flow is projected to rise to $370 million-$500 million, compared with $283 million over the same period.
The Ba3 rating also takes into account risks associated with Grab’s new digital banking operations, which are currently making losses. Grab aims to reach breakeven EBITDA for its financial services segment by the second half of 2026.
As of March 2025, Grab had a strong balance sheet with unrestricted cash balances and short-term investments of $4.2 billion, compared with a debt of just $385 million. The company’s liquidity is further strengthened by around $625 million of non-current time deposits and investments. These substantial cash sources are expected to cover the company’s debt maturities, planned share buybacks and capital expenditures, and provide financial flexibility to absorb losses from its digital banking operations and capitalize on inorganic growth opportunities.
Moody’s could further upgrade Grab’s rating if the company maintains its leading market position, improves its revenue, earnings, margins and free cash flow, reduces losses at its financial services segment, demonstrates prudent financial policies, and maintains very good liquidity. Despite the positive outlook, a downgrade could occur if Grab’s market position deteriorates, its financial services segment incurs further losses, it has insufficient liquidity to fund operations and investments, or if it deviates from its prudent financial policies.
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