ITM Power’s 164% Rally Gains Substance as Government Grant and MSCI Entry Converge in One Week

ITM Power's shares climb 164% in three months, fueled by MSCI index inclusion and UK government grant approval for its Chronos electrolyser, despite mixed analyst views.

ITM Power has emerged as the standout performer in the hydrogen equity space, its shares climbing 164% over the past three months — a gain that outstrips Ballard Power’s 163%, Plug Power’s 105% and NEL ASA’s 70% rise. But analysts caution that this is no second speculative bubble. Instead, the market is conducting a starkly selective reappraisal, rewarding companies with tangible delivery records and clear subsidy traction. ITM fits that bill, and this week it faces a double catalyst that could cement its leadership.

On 29 May, the Sheffield-based electrolyser maker will officially join the MSCI UK Small Cap Index, a rebalancing decision confirmed on 13 May. Passive funds and exchange-traded funds tracking the benchmark must adjust their holdings, generating mechanical buying pressure for a stock with a market capitalisation of roughly £1.1 billion. The index inclusion also lifts visibility among international institutional investors who use MSCI indices as a screening tool — a factor that could sustain interest beyond the initial rebalancing wave.

Just days before that event, on 20 May, the UK government removed a major overhang by formally approving a £46.5 million grant for ITM’s fully automated Chronos electrolyser production line in Sheffield. The funding clears the path for next-generation technology: each Chronos unit will deliver 2 megawatts — triple the output of the current model — at 40% lower cost and with half the footprint. Commercial production is scheduled for 2028. Some analysts had flagged a 52% downside scenario if the grant had fallen through; that risk has now evaporated.

The financial improvement is beginning to show. In the first half of fiscal 2026, ITM generated £18 million in revenue. The adjusted EBITDA loss narrowed to £11.9 million, and management raised the full-year guidance to a range of £40–43 million — a jump of roughly 35% year-on-year. The order book stands at £152 million, with 71% of contracts classified as profitable. Cash at year-end is projected at £210–215 million, providing ample runway.

Analyst opinion remains split despite the accelerating momentum. Jefferies lifted its price target to 200 pence, citing better project visibility and lower discount rates. Morgan Stanley upgraded ITM to Overweight from Neutral — its first upbeat call since 2021 — targeting 170 pence and forecasting a positive EBITDA by 2028. UBS, however, kept a Neutral rating and a 60-pence target, arguing the operational progress is already priced in. Short sellers appear to agree with the bulls: between 15 and 30 April, short positions in the stock dropped by 40.3%.

The commercial pipeline continues to expand beyond the Chronos line. ITM has been selected to supply six POSEIDON electrolyser modules for Uniper’s 120-megawatt Humber H2ub project in England, with a final investment decision expected in 2026 and operations slated for 2029. An expansion beyond 200 MW is envisioned. Meanwhile, the REFHYNE-2 project — a 100-MW electrolyser at Shell’s Rhineland site in Germany, developed jointly with Linde Engineering — received two awards at the World Hydrogen Summit.

Beyond corporate-specific drivers, the broader macro backdrop is providing tailwinds. The European Union’s Innovation Fund has allocated €400 million for decarbonisation projects, while New Zealand launched a NZ$1.2 billion credit programme to help businesses move away from natural gas. The first hydrogen rail transport in the UK also marked an infrastructure milestone, boosting sector sentiment.

The mechanical buying from the index inclusion will fade quickly after 29 May. What matters longer term is whether ITM can accelerate order conversion, expand margins and back up its 2028 profitability target with hard numbers. For now, the hydrogen sector’s selective rally has found its most convincing narrative — and this week’s catalysts put it to the test.