Nel ASA’s Defence Pivot Gives the Stock Wings – But the Order Book Hasn’t Landed Yet

Clean hydrogen firm Nel ASA markets pressurised alkaline electrolyser for defence and energy security, but Q1 revenue fell 5% and order backlog shrank. Stock rallies 49% YTD despite losses.

The clean hydrogen sector has long pitched itself as a climate solution, but Nel ASA is rewriting the script. The Norwegian electrolyser maker is now marketing its new pressurised alkaline platform as a tool for energy security and military applications. The shift comes at a time when the company’s financials remain deep in the red, yet investors have sent the stock surging 49.71% since the start of the year – a rally built almost entirely on hope rather than delivered earnings.

Cheaper modules, higher ambitions

Nel unveiled its latest system on 6 May, a modular pressurised alkaline electrolyser designed to slash customer installation costs by 40% to 60%. By shipping standardised units, the group aims to cut project risk and accelerate deployment. That model appeals to clients seeking decentralised hydrogen production – particularly those in defence and critical infrastructure, where independence from central grids is paramount.

Todd Cartwright, Nel’s head of sales, has noted a shift in customer inquiries toward localised energy security, including military uses. The company is simultaneously ramping up production at its Herøya facility in Norway, targeting an initial annual capacity of one gigawatt, with plans to expand to four gigawatts. The European Union has backed the industrialisation with up to €135 million in funding.

First-quarter numbers tell a different story

While the technology narrative is compelling, the first-quarter figures underscore the gap between promise and performance. Revenue slipped 5% year-on-year to 148 million Norwegian kroner. The operating loss – an EBITDA loss of 100 million NOK – was a marginal improvement but still stark. More worrying was the order intake: the backlog shrank by nearly a quarter to just over 1.1 billion NOK. Nel maintains a cash cushion of roughly 1.4 billion NOK, but the order drought tests that buffer.

CEO Håkon Volldal has described the start of the year as quiet but expects new contracts before the end of the first half. So far, the defence pivot has yet to translate into visible orders.

Market momentum vs. analyst caution

On the trading floor, the stock has marched higher despite the weak operating picture. On Thursday, Nel shares changed hands at €0.29, a 2.5% gain for the day. In Oslo, the close at 3.025 NOK valued the company at around 5.56 billion NOK. The 30-day gain stood at 47.03%, and the year-to-date advance reached 49.71%.

That rally has pushed Nel’s enterprise-value-to-sales ratio to an estimated 5.68 for the current year, while its price-to-earnings ratio remains deeply negative at minus 12.3. The stock’s 90% volatility index underlines the fragility of the sentiment.

Analysts are largely unimpressed. A majority of the sell-side still recommends selling the shares, with a mean price target of 2.14 NOK – essentially flat on the current level. RBC Capital Markets rates the stock “Sector Perform” with a target of 3 NOK, suggesting the recent rally has already priced in much of the upside. The bank warned that the distance to fair value is now thin.

Bigger picture, mixed signals

The broader hydrogen market offers a contrasting outlook. A recent study projects the global green hydrogen electrolyser market could reach $35.27 billion by 2032. Yet DNV, the energy consultancy, slashed its long-term forecast for clean hydrogen by 45%, pointing to project delays and sluggish policy execution.

For Nel, that tension between long-term opportunity and near-term inertia is acute. Orders remain the missing link: without concrete contracts – especially from the defence or security sectors the company is now pursuing – the stock’s rally lacks a foundation. The next major test comes on 15 July, when Nel releases its first-half report. Investors will be looking for evidence that the new platform is generating actual revenue, not just headlines.