Fund Manager Summary
The fund managers believe that Cuscal Ltd presents a strong investment opportunity given its recent performance, with a 15% rally in share price, now trading above the IPO price of $2.50. In their opinion, the company’s resilience is highlighted by its defensive nature and strong earnings growth, particularly as revenues are linked to fixed fees rather than transaction values. They note that Cuscal has minimal exposure to the RBA review on card payment costs, which mitigates potential risks. Furthermore, the fund managers see the stock trading at a significant discount compared to the broader market, suggesting that as the company meets its prospectus forecast, there is potential for a positive re-rate in the share price.
Source: Trading View
Commentary From The Managers
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Ryder Capital
30 Sept 2025
$3.87
Summary
- Cuscal Limited represents a 5.17% portfolio weight in Ryder Capital's investments.
- In the September quarter, Cuscal achieved a 31% return, bolstered by the announcement of a $75m acquisition of Indue, a B2B payments competitor.
- The acquisition is deemed strategically sensible and is expected to be highly accretive to value, with significant cost synergies anticipated over the next three years.
- On a post-synergies basis, Cuscal paid just 3.7x P/E for Indue, with the acquisition funded entirely from cash.
- Cuscal boasts a defensive and growing earnings profile that is not yet fully reflected in its earnings multiple.
- As the integration of Indue progresses and liquidity improves, Ryder Capital expects Cuscal to trade at a significantly higher valuation.
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Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Managers
Ryder Capital
30 Sept 2025
$3.87
- Cuscal Limited represents a 5.17% portfolio weight in Ryder Capital's investments.
- In the September quarter, Cuscal achieved a 31% return, bolstered by the announcement of a $75m acquisition of Indue, a B2B payments competitor.
- The acquisition is deemed strategically sensible and is expected to be highly accretive to value, with significant cost synergies anticipated over the next three years.
- On a post-synergies basis, Cuscal paid just 3.7x P/E for Indue, with the acquisition funded entirely from cash.
- Cuscal boasts a defensive and growing earnings profile that is not yet fully reflected in its earnings multiple.
- As the integration of Indue progresses and liquidity improves, Ryder Capital expects Cuscal to trade at a significantly higher valuation.
Summary
Forager Funds
30 Sept 2025
$3.87
- Cuscal Ltd (CCL) provides essential payments infrastructure for small banks and credit unions lacking their own systems.
- Revenue is recurring and contracted long-term, driven by increasing transaction volumes.
- Benefits from winning new clients and consolidation in mid-sized and smaller banks.
- Strong FY2025 results met the promises made during the November 2024 IPO, with a significant strategic development.
- Acquisition of Indue for $75 million in cash reshapes the industry and enhances Cuscal’s earnings.
- Reported a 10% increase in transaction volumes and 16% growth in earnings per share, exceeding prospectus forecasts by 5%.
- Guidance for ongoing net profit growth of more than 10% driven by organic growth and operating leverage.
- Indue acquisition offers an additional earnings lever, despite its current low profitability.
- Management expects $15 to $20 million in post-tax cost savings from eliminating duplicated costs, with full benefits by FY2029.
- Projected earnings per share to be 25% higher post-acquisition.
- Forager Funds continues to hold and has increased its investment following the acquisition announcement.
- The overall outlook indicates earnings could nearly double by 2029, attracting investor interest and moving towards index inclusion.
- Cuscal is now the Fund’s largest holding.
Summary
Ten Cap
31 Aug 2025
$3.75
- Solid FY25 results were overshadowed by the acquisition of Indue.
- The acquisition is viewed as a core pillar of the investment case.
- The deal is highly accretive and materially enhances Cuscal’s growth runway.
- Ten Cap continues to hold because of the positive implications for growth over the next five years.
Summary
Forager Funds
31 Aug 2025
$3.75
- Forager Funds identifies Cuscal (CCL) as a standout performer in the portfolio.
- 2025 results met prospectus expectations, indicating strong operational performance.
- Cuscal announced a significant acquisition of Indue for $75 million in cash.
- Indue is not currently highly profitable, but Cuscal expects substantial cost efficiencies from integrating Indue’s customers.
- Projected elevated earnings growth for at least the next four years following the acquisition.
- The existing business is also expected to maintain healthy growth.
- This combination is likely to lead to a substantial re-rating of Cuscal's value.
- Cuscal is now the largest holding in the Fund.
Summary
Ryder Capital
31 Mar 2025
$2.60
- Cuscal rallied 15% during the quarter, trading above the IPO price of $2.50.
- Ryder Capital continues to add to its position at attractive prices, all below the IPO issue price.
- Market noise regarding the RBA review into card payment costs is not directly impacting Cuscal, with minimal potential effects.
- Revenues are driven by fixed fees related to card and digital payment volumes, which consistently grow.
- Despite its defensive nature and strong earnings growth, the company trades at a significant discount compared to the broader market.
- As Cuscal executes against its prospectus forecast, there is potential for a positive re-rate in share price.
Summary
Ryder Capital
30 June 2024
$2.40
- Ryder Capital initiated a meaningful position of ~5% in Cuscal Ltd (CCL) through the IPO at $2.50 per share.
- Position was built via on-market purchases as the stock traded below the issue price.
- At year-end, Cuscal was trading 20% above the issue price.
- Ryder Capital continues to hold due to strong performance and potential for growth.
Summary
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
ANALYST INSIGHT
Equity Research Analyst
With a resilient business model and strong earnings growth, the market seems to be undervaluing Cuscal Ltd. As clarity emerges around its robust revenue streams, a significant re-rating appears likely, especially with shares trading at a discount compared to broader market trends.
Last Updated: 30 Sept 2025
Query The Data
Frequently Asked Questions
Who is investing in Cuscal Ltd (ASX:CCL)?
Fund managers including Ryder Capital, Ten Cap and Forager Funds have invested in Cuscal Ltd (ASX:CCL).
Why do fund managers invest in Cuscal Ltd?
Fund managers invest in Cuscal Ltd due to its strong earnings growth driven by fixed fees from card and digital payment volumes, which are consistently increasing. The company remains unaffected by the RBA's review of card payment costs, minimizing potential risks. Additionally, Cuscal trades at a significant discount compared to the broader market, presenting an attractive investment opportunity as it aligns with its growth forecasts.
What happened to Cuscal Ltd (ASX:CCL)?
Fund managers are investing in Cuscal Ltd due to its strategic acquisition of Indue, which is expected to enhance growth and profitability significantly. The $75 million deal is seen as highly accretive, providing cost synergies and improving earnings potential over the next several years. Cuscal's strong financial performance, driven by recurring revenue from increasing transaction volumes, positions it well for future growth. With projections of nearly doubling earnings by 2029 and a robust earnings profile, Cuscal is viewed as a compelling investment opportunity.