ITM Power: The State Steps In, But the Market Isn't Buying It Yet

British government holds 10.4% stake in ITM Power after £87M funding, but shares slide 16% in 30 days as market skepticism persists despite analyst upgrades.

The British government is now a major shareholder in ITM Power, having poured nearly £87 million into the Sheffield-based electrolyser manufacturer through a combination of equity and grants. Yet the stock continues to slide, leaving investors to wonder why such a clear vote of confidence from Westminster hasn't translated into market momentum.

Shares in the hydrogen specialist last changed hands at €1.15, marking a 2.88% decline on the day and a 13.64% drop over the past seven trading sessions. The 30-day picture is even starker, with the stock losing 16.36% of its value. This sell-off has pushed the 14-day Relative Strength Index down to 35.6, edging towards the oversold threshold, while the share price tests its 200-day moving average at €1.09 — a level that long-term investors traditionally watch as a gauge of trend stability.

A Government-Backed Transformation

The shift in ITM Power's shareholder structure has been dramatic. Great British Energy, the state-owned investment vehicle, now holds roughly 10.4% of the company following a £40 million capital injection. That stake positions the government as a cornerstone investor, embedding the electrolyser maker firmly into the UK's net-zero strategy.

On top of that, the Department for Energy Security and Net Zero has formally approved a £46.5 million grant earmarked for the industrialisation of the "Chronos" electrolyser platform. The funds will finance a new automated production line in Sheffield with an annual capacity of one gigawatt — a project management describes as a turning point for scaling green hydrogen manufacturing.

Analyst Optimism vs. Market Skepticism

The divergence between operational progress and stock performance has created a curious dynamic. Berenberg recently lifted its price target from 110 to 200 pence, citing the "game-changing" potential of the Chronos production line and ITM Power's expanding industrial partnerships. Morgan Stanley followed suit, upgrading the stock to "Overweight" with a 170 pence target, and now expects the company to reach EBITDA break-even by fiscal 2028 — a full year ahead of previous consensus.

Those projections sit at a significant premium to the current share price, which has fallen sharply from its May high of €2.58. On a year-to-date basis, the stock still shows a gain of roughly 60%, but the retreat from those spring peaks underscores how much confidence has eroded since the sector's earlier rally.

A Growing Order Book and Strategic Alliances

Operationally, the company continues to build momentum. Its order book stands at around £152 million, with over 70% of those contracts now classified as profitable. A recent 20-megawatt green hydrogen project has received the final investment decision from its customer, clearing the way for construction to begin.

ITM Power has also deepened its network of industrial partners. A collaboration with Rheinmetall targets the defence and heavy industry sectors through the "Giga PtX" project. A separate partnership with DB Systemtechnik focuses on hydrogen solutions for rail and transport infrastructure. And progress continues on the 200-megawatt facility in Lingen with RWE, one of the largest PEM projects globally.

The August Test

All eyes are now on the full-year results for the period ending 30 April 2026, due in August. Investors will be looking for clarity on two key metrics: the trajectory of the order book and the ramp-up of the "Hydropulse" model, where ITM Power builds and operates its own plants. The report should also shed light on the path to operating profitability, particularly around the phasing out of legacy contracts and capacity utilisation at the Sheffield factory.

With an annualised 30-day volatility of 87.78%, ITM Power remains a high-risk play typical of the hydrogen sector. The government's backing and analyst upgrades provide a floor of credibility, but the market is demanding proof that the state's support will translate into sustainable financial performance. The August numbers will either validate the optimism or explain the caution.