The £46.5 Million Subsidy Decision That Could Define ITM Power’s Trajectory

ITM Power shares surge 400% from 52-week low, but retail investors sell as institutions buy ahead of UK government subsidy decision in May.

ITM Power’s shares have staged a remarkable recovery from their 52-week low of 32.80 pence, climbing to nearly 175 pence in a matter of months — a rally that has split the analyst community and created a chasm between institutional and retail investors. At the heart of the debate lies a government subsidy decision expected in late May that could fundamentally alter the company’s production capacity.

A Tale of Two Trading Camps

The divergence in investor behavior has been stark. On one side, institutions have been piling in, with Jefferies upgrading the stock to “Buy” and more than doubling its price target to 200 pence from 115 pence. Morgan Stanley followed suit, nearly tripling its target to 170 pence from 60 pence — its first positive rating on a hydrogen electrolyser manufacturer since 2021. The bank sees ITM Power reaching EBITDA breakeven by fiscal 2028, a year ahead of consensus expectations, and forecasts revenue of £169 million this year versus the consensus estimate of £109 million.

On the flip side, retail investors have been heading for the exits. On the AJ Bell trading platform, ITM Power became the most-sold stock, overtaking blue-chip names like Shell. At one point, over 13 million shares changed hands in a single session — well above the daily average of roughly 5.3 million. The stock touched a multi-year high of 174.80 pence before pulling back.

The Government Backing Behind the Rally

The institutional enthusiasm isn’t??. The UK government has thrown its weight behind ITM Power in two distinct ways. Great British Energy is contributing £40 million as a strategic stake, while the Department for Energy Security and Net Zero is providing £46.5 million specifically for the Chronos production line — a next-generation electrolyser platform targeting a capacity of one gigawatt.

The company also secured a partnership with Rheinmetall for the Giga-PtX project, a pan-European synthetic fuel network for NATO forces. This defense angle adds a layer of strategic importance that’s unusual for a clean-tech company.

The Skeptics’ Case

UBS remains firmly on the sidelines, maintaining its 60 pence price target and warning that the stock’s price-to-sales ratio of roughly 38 has run far ahead of operational reality. The 50-day moving average sits at 85.57 pence and the 200-day average at 74.84 pence — meaning the stock is trading well above both technical benchmarks.

The bear case isn’t without foundation. While ITM Power posted a record first-half revenue of £18 million for fiscal 2026 and raised its full-year guidance to between £40 million and £43 million, the company’s pretax loss widened to over £45 million. The order book stands at £152 million, with management now classifying nearly three-quarters of those contracts as profitable.

A Cash-Rich Position Provides a Buffer

What gives the bulls ammunition is ITM Power’s balance sheet. The company carries no debt and holds roughly £198 million in cash — a war chest that Jefferies believes funds operations through at least 2028. That financial cushion allows management to absorb losses while scaling up production.

Insider Activity Raises Eyebrows

Technology director Simon Bourne exercised options on 1.33 million shares from a 2010 grant at an average price of 32 pence, then sold approximately 873,000 of them at 157.44 pence each. The company characterized the transaction as a “sell-to-cover” — a routine sale to meet tax obligations arising from the option exercise. Bourne retains roughly 657,000 shares.

What’s Next: Three Catalysts on the Horizon

The company’s fiscal year ended April 30, with full-year results expected by late October. In the meantime, three events will command investor attention. First, the outcome of the second UK hydrogen allocation round. Second, a potential final investment decision on Uniper’s 120-megawatt project in the Humber region. And third — the most consequential of all — the government’s decision on the Chronos subsidy.

If the subsidy passes muster under the UK’s Subsidy Control Act, management has signaled it will immediately take a final investment decision to expand the Sheffield facility. The Chronos line promises to triple output per unit while cutting costs by 40 percent — a step change that could justify the current valuation, or expose it as premature. The answer should come within weeks.