ITM Power’s MSCI Entry and State Backing Split the Market Ahead of a Defining June

ITM Power shares surged to 210p on MSCI inclusion, but retail investors sold while institutions bought on £200M cash, state backing, and rising orders; near-term catalysts loom.

ITM Power has entered June riding a wave of structural catalysts that have fractured its shareholder base. The electrolyser maker’s inclusion in the MSCI United Kingdom Small Cap Index at the end of May brought automatic buying from passive funds, yet retail investors have seized the opportunity to lock in gains from a year-long rally that has multiplied the share price nearly fourfold from its 46-pence trough 12 months ago.

The stock touched a fresh 52-week high of 194.70 pence midweek on the interactive investor platform, and later closed at 210 pence on Friday — a 7.7% gain for the day. But the trading data tells a nuanced story: on AJ Bell, ITM Power was the most sold stock of the session, while on interactive investor, buy orders accounted for only 45% of trades despite the stock being among the ten most actively traded names alongside blue chips like Rolls-Royce and BP. The divergence between private investors taking profits and institutional managers adding positions reflects a market wrestling with two different time horizons.

The fundamental story that has attracted institutional demand rests on a triple foundation: state backing, improving financials, and a pipeline of near-term catalysts. Great British Energy has injected £40 million of equity as part of an £86.5 million support package, underpinning a net liquidity position that should end the fiscal year between £170 million and £175 million. With no debt and roughly £200 million of cash on hand, ITM Power carries no immediate financing risk — a point analysts cite as removing the threat of dilution for the foreseeable future.

Operating metrics are moving in the right direction even if profits remain distant. First-half revenue hit a record £18 million, and management has lifted full-year guidance to between £40 million and £43 million — a 35% year-on-year increase. The adjusted EBITDA loss narrowed to £11.9 million from £16.8 million in the prior-year period, with the full-year loss expected to land between £27 million and £29 million. The order book stands at £152 million, with 71% of that total considered profitable under existing contracts.

Analyst opinion remains divided, but the balance has tilted positive. Jefferies lifted its price target to 200 pence with a buy rating, while Morgan Stanley upgraded the stock to overweight at 170 pence in April — the first such rating for a UK hydrogen stock since 2021. Berenberg retains a buy but cut its target to 110 pence, and UBS sits at neutral with a fair value of just 60 pence. The median view among the eleven analysts covering the stock is a hold, but seven recommend buying.

Morgan Stanley’s upgrade was driven by an expectation that ITM Power can reach EBITDA breakeven in fiscal 2028, a year earlier than previously modelled, provided it books around 200 MW of new orders. That timeline now faces a series of binary tests in the coming weeks.

June brings three decisions that will shape the company’s trajectory. The final investment decision on Chronos — a fully automated production line in Sheffield for a next-generation electrolyser promising triple the power output at 40% lower capital cost and half the footprint — is expected this month. Simultaneously, the second round of the UK’s hydrogen allocation (HAR2) will reveal which projects secure contracts from a shortlist of 27; ITM stands to supply six 20 MW POSEIDON modules to Uniper’s Humber H2ub project if it gets the green light. Uniper’s own final go-ahead is the third variable.

CEO Dennis Schulz has tied his personal stake of 1.3 million shares to the successful delivery of Chronos and the signing of profitable contracts, a move designed to align management compensation with the company’s operational milestones. Meanwhile, technology chief Simon Bourne sold most of his vested options — 1.3 million at an average price of 157.44 pence — citing tax obligations, leaving him with roughly 656,000 shares.

All eyes will turn to September 15, when ITM Power publishes its full-year results. By then, the three June decisions should have either reinforced or undermined the bullish case. For now, the stock trades at a level that already prices in a successful Chronos FID and a favourable HAR2 outcome. The next few weeks will determine whether the retail sellers or the institutional buyers turn out to be right.