ITM Power's Rally Enters a Crucial Phase with Grant and Index Events Ahead

ITM Power faces pivotal week: £46.5M grant decision on May 26 and MSCI index buying on May 29 test shares as retail sellers clash with institutional demand.

A £86.5 million state-backed financing package has already improved ITM Power's runway for industrial expansion. Yet the hydrogen company's shares face a more immediate test in the final week of May, as a government grant decision and forced buying from index funds fall within three days of each other.

The British government's support includes a £40 million equity injection from Great British Energy and a potential £46.5 million grant from the Department for Energy Security and Net Zero. The grant decision, due on 26 May, will determine whether ITM can proceed with a final investment decision in June on a new automated production line at its Sheffield site. That facility is designed to manufacture the next-generation Chronos electrolyser stack at a capacity of one gigawatt per year, a step that the company says could roughly halve manufacturing costs.

Shares have already reflected some of the optimism. On 15 May, the stock closed above its 200-day moving average at 161.30 pence, a technical breakout that mid-term traders often see as a signal of stabilising momentum. Since then the price has fluctuated between 156.80p and 168.30p, with the 170p mark emerging as the next resistance level. A sustained hold above the moving average would lend weight to the bullish reading; a fall below it would quickly capsize the signal.

Three days after the grant ruling, a different kind of catalyst arrives. ITM Power was added to the MSCI United Kingdom Small Cap Index on 13 May, with the change taking effect after the close on 29 May. Passive funds and exchange-traded products that track the benchmark will need to adjust their portfolios, typically creating a wave of buying pressure that can be especially pronounced for smaller stocks. The company's market capitalisation of roughly £1.11 billion gives it enough weight to matter.

The combination of near-term buying from index tracking and the fundamental implications of the grant has set up a tug-of-war between retail sellers and potential institutional buyers. On the AJ Bell trading platform, ITM Power recently ranked as the most sold stock of the day, as private investors who rode a 401% annual rally took some chips off the table. Whether that profit-taking gets absorbed by index-driven demand will become clear in the days after the rebalancing.

Operationally, the company has rebuilt credibility after a difficult period. First-half revenue hit a record £18 million, and the order book stands at £152 million, with 71% of contracts classified as profitable. Management has guided for full-year revenue of between £40 million and £43 million. Yet profitability remains distant: the pretax loss for the fiscal year to April 2025 widened to £45.4 million from £27.1 million a year earlier. Jefferies does not expect an EBITDA breakeven before 2028.

That timeline is manageable thanks to a balance sheet that holds nearly £200 million in cash and no debt. Analysts see no near-term need for fresh capital. The funding outlook has improved further with the government package, prompting Berenberg to lift its price target from 100p to 110p. Jefferies took a more aggressive stance, raising its target from 115p to 200p, citing better revenue visibility and lower capital costs.

The strategic alliance with Worley has also provided a jolt. When the partnership was detailed, trading volume surged to 13.2 million shares and the stock touched an intraday high of 174.80p. Worley plans to integrate ITM's Neptune V electrolyser into mid-scale hydrogen projects, opening a channel for recurring deployment.

ITM is simultaneously building a service-oriented revenue stream through its Hydropulse subsidiary, which develops, owns and operates decentralised green hydrogen plants. The model shifts a portion of earnings away from one-off equipment sales toward more predictable recurring income.

The 26 May grant decision and the 29 May index inclusion will therefore test both the fundamental story and the technical setup in quick succession. A favourable grant verdict would underwrite the scaling narrative; the index rebalancing will then reveal how much institutional demand is willing to step in once the mechanical buying subsides. The 200-day line at 161p remains the level to watch for anyone betting on whether the rally has further to run.