Two Days, Two Decisions: ITM Power Faces a Pivotal Week as Grant Ruling and Index Entry Loom

ITM Power shares slide 7.4% after 160% rally, but institutional investors await crucial £46.5M grant decision on May 26 and MSCI index inclusion on May 29.

After more than doubling since the start of the year, ITM Power’s stock hit a wall on Friday, sliding 7.4% to 143.30p as retail investors rushed to book profits on the AJ Bell platform, where it became the most sold stock of the session. The heavy turnover of 13.2 million shares came just days after the shares touched a year-high of 179.69p, before retreating to 162.43p and then slipping further. Yet the selling has done little to shake institutional holders, who are betting on a far bigger catalyst: a state grant decision on 26 May that could unlock the next phase of growth.

That decision concerns the Chronos production line at the Sheffield factory. Britain’s subsidy authority is due to rule on a £46.5 million grant that, together with a £40 million equity commitment from Great British Energy, would triple electrolyser capacity to one gigawatt a year and cut unit costs by 40%. Management has signaled that a green light would enable a final investment decision in June — a step that could finally help the company move beyond a legacy of loss-making contracts.

The grant is not the only event on the calendar. On 29 May, after the close of trading, ITM Power will join the MSCI United Kingdom Small Cap index. The forced buying by passive funds tracking the benchmark is expected to lift trading volumes and raise the company’s profile among international investors. The index change was confirmed in MSCI’s May 2026 review.

Jefferies, which recently lifted its price target to 200p from 115p with a Buy rating, sees the stock as undervalued given rising earnings expectations and lower discount rates. Of the eleven analysts covering ITM Power, seven rate it a Buy, four a Hold and one a Sell. But the bank also flagged the downside: if the grant decision is negative, the shares could tumble 52%.

Financially, ITM Power is in solid shape despite widening losses. The first half of the 2026 fiscal year delivered a record £18 million in revenue, and the full-year forecast exceeds £40 million. The order book stands at £152 million, with 71% of contracts now considered profitable. The pre-tax loss in the year to April 2025 deepened to £45.4 million from £27.1 million a year earlier, but the company sits on roughly £198 million in cash and has no debt. Jefferies estimates that cash runway extends to at least 2028.

Beyond Sheffield, the pipeline continues to expand. ITM Power is supplying Uniper’s Humber H2ub project in Killingholme with six 20-megawatt Poseidon modules, with a final investment decision expected in 2026 and start-up in 2029. A separate 150-megawatt capacity reservation with RWE and agreements totalling more than 710 megawatts in Germany add further visibility. The Uniper project alone represents an initial 120 megawatts of capacity.

The coming days will test whether the 160% year-to-date rally is built on solid ground. If the grant comes through and the MSCI rebalancing drives further buying, the path to serial production and profitability becomes clearer. A rejection would leave the company reliant on its existing cash buffer and raise questions about the speed of its turnaround. The full-year results for the period to April 2025 are due at the end of October, but the decisions this month and next will determine whether the company’s trajectory has truly changed.