Two catalysts—a government grant verdict and MSCI index inclusion—will determine if ITM Power’s 160% stock surge has lasting substance or is just momentum.
The pieces are falling into place for ITM Power’s next growth chapter – but the stock’s eye-watering rally now faces a defining fortnight. Two catalysts are converging within days: a £46.5 million government grant decision and an index inclusion that will force passive funds to buy in. Together they will test whether the 160% year-to-date surge has operational substance or is simply riding momentum.
Grant verdict and Chronos ambitions
The Subsidy Advice Unit has completed its assessment of the grant under the Subsidy Control Act 2022, clearing the final regulatory hurdle. The Department for Energy Security and Net Zero now has the green light to formalise the funding agreement, with a decision expected by 26 May. The grant is a capital subsidy to be disbursed across the 2026/27 and 2027/28 financial years, earmarked for a new 1 GW automated manufacturing line in Sheffield that will produce ITM’s next-generation Chronos electrolyser.
Chronos marks a step-change in performance: each unit delivers 2 MW, triple the output of the current system, with a 40% reduction in costs and half the physical footprint. The entire Sheffield project carries a price tag of up to £120 million, backed by £86.5 million in combined state support – including a £40 million commitment from Great British Energy. Management intends to take a final investment decision immediately after the SAU ruling, targeting commercial operation of the line in 2028.
MSCI entrance adds mechanical demand
Three days after the grant decision, ITM Power will join the MSCI UK Small Cap Index, effective after the close on 29 May. The inclusion obliges passive funds and ETFs that track the benchmark to adjust their holdings, creating a predictable wave of buying. With a market capitalisation of roughly £1.11 billion, ITM carries enough heft to exert a meaningful index effect. The move also raises the company’s visibility among international institutional investors who use MSCI as a screening tool.
Should investors sell immediately? Or is it worth buying ITM Power?
The index event lands on a stock that has already quadrupled from its lows. But recent price action suggests some profit-taking: one session saw the shares drop 7.4% to 143.30 pence on heavy volume of 13.2 million shares, with retail investors on the AJ Bell platform making ITM the most sold stock of the day.
Short sellers retreat, insiders buy
The bearish camp is thinning rapidly. Short positions on the stock had fallen 40.3% between 15 and 30 April, the most recent data available, standing at just 18,761 shares. That decline in negative bets coincides with a broader rotation into hydrogen equities and growing confidence that ITM’s turnaround is gaining traction.
Company insiders have been putting their own money behind that thesis. On 15 May, the CEO and CTO each acquired 184 shares at an average of 162 pence under ITM’s “Buy as You Earn” plan. Meanwhile, chief technology officer Simon Bourne exercised options over 1.33 million shares at an average of 32 pence, then sold roughly 873,000 of them at 157.44 pence – a move the company attributed to settling his tax liability, not a loss of conviction.
Financial progress and persistent losses
ITM’s first-half revenue for fiscal 2026 hit a record £18 million, with management now guiding for full-year sales between £40 million and £43 million. The order book stands at £152 million, and crucially 71% of those contracts are considered profitable – a sharp departure from the legacy portfolio that dragged on margins.
Still, the red ink is deep. The pre-tax loss for the year ended April 2025 widened to £45.4 million from £27.1 million a year earlier. The cash position, however, remains robust: year-end liquidity was lifted to a range of £210 million to £215 million, helped by funds from the Great British Energy subscription. Jefferies does not expect a positive EBITDA until 2028 at the earliest.
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Analyst divergence hits a 140-pence spread
Opinion on the stock is as polarised as the balance sheet. Jefferies raised its price target from 115 pence to 200 pence, citing higher earnings estimates, lower discount rates and improved project visibility – but warned that an unfavourable grant decision carries a 52% downside risk to the share price. Morgan Stanley upgraded ITM to “Overweight” with a 170-pence target, the first time it has turned bullish on a UK hydrogen name since 2021, and also expects positive EBITDA by 2028. Berenberg remains a buyer but trimmed its target to 110 pence.
At the other end of the spectrum, UBS sticks with “Neutral” and a 60-pence target, arguing that operational improvements are already priced into the stock. The wide 140-pence gap between the highest and lowest analyst targets underscores the uncertainty that still surrounds ITM’s transition from loss-making legacy sales to a scalable, standardised product.
Beyond the grant, another potential catalyst lurks: Uniper’s planned 120 MW Humber project, which has already awarded a design contract to ITM but awaits a final investment decision. For now, all eyes are on 26 and 29 May. Once the mechanical buying from the index rebalancing fades and the grant verdict is known, the market will have to decide whether the multi-fold rally is justified by the hard numbers – or whether it has run ahead of the fundamentals.
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