ITM Power’s 400% Surge Meets Its First Real Test: A £46.5m Decision and a New Industrial Partner

ITM Power's 400% rally faces a make-or-break moment as a £46.5M subsidy decision on its Chronos line could validate or deflate the stock. Institutional buying contrasts with retail selling.

The blistering twelve-month rally that has lifted ITM Power’s stock from 32.80p to nearly 175p — a gain of roughly 400% — now enters a phase where operational reality will be asked to catch up with market enthusiasm. On 26 May the UK’s subsidy authority is due to rule on a £46.5 million grant for the company’s next-generation Chronos production line, a decision that could either validate the explosive share price move or leave it looking precariously stretched.

The run has been extraordinary by any measure. On Monday alone the stock added another 16%, with 13.2 million shares changing hands — 168% above the average daily volume. Yet the crowd is divided. Retail investors on platforms such as AJ Bell have been heavy sellers, with ITM Power appearing on sell lists so frequently that roughly one trade in every fifty involved the stock. The buying, by contrast, is coming from institutional desks. Jefferies more than doubled its price target to 200p from 115p, citing higher earnings expectations, lower capital costs and clearer political support. Morgan Stanley, in its first positive call on an electrolyser maker since 2021, upgraded the shares to Overweight with a 170p target, up from just 60p.

Behind the valuation battle lies a company that is beginning to show real operational traction. In the first half of its fiscal year ITM delivered record revenue of £18 million and lifted its full-year guidance to a range of £40 million to £43 million. The order book has swelled to £152 million, and critically 71% of contracts are now profitable — a sharp break from the loss-making legacy projects that weighed on earlier results. The company holds roughly £198 million in net cash, is debt-free, and Jefferies estimates that runway extends to at least 2028 without needing to raise fresh capital.

A fresh commercial dimension emerged this week with the announcement of a long-term partnership with Worley, a global engineering and construction group. The deal integrates ITM’s flagship Neptune V electrolyser into Worley’s portfolio of mid-scale hydrogen projects worldwide, giving the UK manufacturer a distribution channel it previously lacked. The strategic alignment bolsters the case that ITM’s technology is moving beyond prototype stages into industrial deployment.

That deployment hinges on Chronos. The new production line, sited in Sheffield, is designed to manufacture electrolyser stacks with an output of two megawatts each — triple the capacity of the current model — while slashing costs by 40% and halving the physical footprint. The 26 May subsidy decision is the gatekeeper. A positive ruling would allow management to take a final investment decision in June. The technology is so central to the company’s future that CEO Dennis Schulz can earn 1.3 million performance shares if profitable contracts are secured and Chronos is delivered on schedule.

The analyst community remains sharply split. Jefferies sees 37% upside in its bull case but warns of 52% downside risk if things go wrong. Morgan Stanley expects the company to reach EBITDA breakeven in fiscal 2028, earlier than the consensus. UBS, however, sticks with a 60p target and a Neutral rating, arguing that the shares are trading at roughly 38 times forward revenue while the business is still generating operating losses of around £30 million. The relative strength index has pushed above 91, a level that typically signals an overbought market.

Insider behaviour adds another layer of nuance. Technology chief Simon Bourne exercised options over 1.33 million shares and subsequently sold approximately 873,000 of them, a move the company attributed to tax obligations. Founder and former executives have also reduced positions in recent months. Yet the UK government, through Great British Energy, holds just over 10% of the equity after injecting £40 million in April, a vote of confidence from a politically important shareholder.

Beyond the Chronos verdict, a series of catalysts could shape the narrative in the coming months. The British government’s second Hydrogen Allocation Round is expected to award contracts, and Uniper’s 120-megawatt project in Humber may reach a final investment decision. ITM’s full-year results for the period ending 30 April are due in late October, giving the market months of operational data to digest before the next formal update.

The 400% rise has already rewritten the stock’s story. Whether that story holds up will depend on whether the machinery in Sheffield can deliver the promised leap in performance — and whether the subsidy authorities agree to help pay for it.