ITM Power: A Defining Fortnight as Index Entry, a Pending Grant, and Insider Buying Align

Hydrogen electrolyser specialist ITM Power nears MSCI index entry and a £47M government grant, with insider buying and project wins driving revenue growth, though profitability remains elusive.

The next two weeks could prove pivotal for ITM Power. The hydrogen electrolyser specialist is set to enter the MSCI United Kingdom Small Cap Index after the market close on 29 May, a move that forces passive funds to adjust their portfolios and can generate meaningful demand for smaller stocks. That technical event coincides with a decision on a government grant of just under £47 million, which the company would use to expand its automated gigawatt manufacturing line.

Insiders have already cast their vote of confidence. Chief executive Dennis Schulz and technology chief Simon Bourne bought shares at around £1.62, according to filings from 18 May. Investors took the purchases as a clear signal that management believes in the turnaround. The stock responded by climbing more than 5% on Tuesday morning to approximately 168 pence.

Projects and service contracts build the revenue story

Beyond the index effect, ITM has been winning tangible business. In the UK, it signed a 12.5 MW contract with Octopus Energy Generation to install NEPTUNE V systems at a Kimberly-Clark plant in Northfleet. The facility, which produces Andrex toilet paper, will use green hydrogen to decarbonise its operations by the end of 2027. In Wales, ITM will supply a 20 MW POSEIDON electrolysis module for the West Wales Hydrogen Project, run by MorGen Energy, with the plant expected to produce around 2,000 tonnes of green hydrogen annually from 2028.

Crucially, the Milford Haven site comes with a long-term service contract spanning ten years. That marks a strategic shift towards recurring revenue rather than one-off equipment sales. Through its Hydropulse subsidiary, ITM builds and operates decentralised green hydrogen units, locking in long-term offtake agreements that should make earnings more predictable. The company has also enlisted engineering group Worley to integrate its Neptune V electrolyser into medium-sized hydrogen projects, opening another channel to external pipelines.

Revenues are climbing, but profits remain distant

The operational pivot is showing up in the numbers. ITM posted a record first-half revenue of £18 million, and the full-year forecast has been lifted to as much as £43 million, with an order backlog of £152 million. More than two-thirds of contracts are now generating positive margins — a notable improvement for a sector long plagued by high development costs and low utilisation.

Yet profitability is still a way off. In the financial year ending April 2025, the pre-tax loss widened to £45.4 million from £27.1 million a year earlier. The balance sheet offers breathing room: ITM holds roughly £198 million in cash and carries no debt. Management does not expect to reach operating break-even before 2028, and the company has guided for cash reserves of at least £170 million by the end of April 2026.

Analysts are divided on the outlook

The improving revenue picture has prompted some upgrades. Zeus Capital raised its forecast for the 2026 financial year, now expecting revenue between £40 million and £43 million, up from a previous maximum of £40 million, citing faster-than-expected progress on the NEPTUNE V and TRIDENT stack technologies. Jefferies lifted its price target from 115 pence to 200 pence, pointing to higher earnings estimates, lower discount rates, and better project visibility. Morgan Stanley turned positive on a British hydrogen stock for the first time since 2021, initiating coverage of ITM with an ‘Overweight’ rating and a 170 pence target; the bank projects positive EBITDA from 2028.

UBS remains the outlier, sticking with a 60 pence target and a far more cautious view. The stock traded at 167.90 pence on Monday morning, sitting well above that bearish assessment but still within reach of recent resistance.

Technical and tactical catalysts

On the charts, the breakout above the 200-day moving average at 161.30 pence on 15 May was a meaningful milestone. Since then, the shares have oscillated between 156.80 pence and 168.30 pence, with the 170 pence zone forming the next hurdle. Passive buying ahead of the MSCI rebalancing on 29 May should provide a near-term tailwind.

Once the index effect fades, attention will shift back to the execution of the British projects and to whether the growing stream of service revenue can meaningfully shorten ITM’s path to profitability. The pending government grant decision will also hang over the stock — a positive outcome could accelerate the push towards gigawatt-scale manufacturing and reinforce the case the bulls are making.