ITM Power: Grant Decision, MSCI Entry, and a NATO Link Put the Hydrogen Play in the Spotlight

ITM Power awaits £46.5M grant verdict, MSCI inclusion, and Rheinmetall deal. Shares hit 52-week high, up 292% in year. Analysts flag binary risk.

A trifecta of catalysts is converging on ITM Power this week, as the British electrolyser maker chases a government grant, index inclusion, and a deepening relationship with defence giant Rheinmetall. The shares touched a fresh 52-week high of 189.40 pence on Tuesday before closing at 180.00 pence, a daily gain of roughly 5.8%. Over twelve months the stock has nearly quadrupled, adding about 292%.

Grant verdict due Tuesday

The most immediate trigger comes on 26 May, when the UK energy ministry is expected to announce a capital grant of £46.5 million for a fully automated 1-GW production line in Sheffield. The Competition and Markets Authority published its assessment on 20 May, concluding that the subsidy complies with the British subsidy control framework. That report is non-binding — the decision itself remains with the minister. One condition stands out: ITM Power must demonstrate that it has secured equity from third-party investors to co-finance the project, without compromising its balance sheet or commercial viability.

The grant would be disbursed over fiscal years 2026/27 and 2027/28, tied to milestones and expenditure proof. Jefferies has warned that a negative outcome could knock 52% off the share price, though the bank itself rates the stock a "Buy" with a 200 pence target. Morgan Stanley recently upgraded to "Overweight", setting a target of 170 pence.

Defence pivot opens a new addressable market

Beyond the subsidy, ITM Power is repositioning itself as a supplier to NATO via the Giga-PtX project with Rheinmetall. The plan involves a Europe-wide network of decentralised synthetic-fuel plants, each equipped with up to 50 megawatts of electrolysis capacity and producing 5,000 to 7,000 tonnes of e-fuel annually. Several hundred such units are envisioned, with an initial focus on the UK. Rheinmetall is also working with German alkali electrolyser maker Sunfire and e-fuel specialist Ineratec, but ITM Power’s role in the project gives it exposure to a defence-driven hydrogen market that extends well beyond civilian applications.

Index inclusion brings passive buying

On 29 May, ITM Power will join the MSCI United Kingdom Small Cap Index. Passive funds tracking the index will be forced to buy the stock, boosting trading volumes and visibility among international investors. The rebalancing coincides with the grant decision, amplifying the binary risk that analysts have flagged.

Financials improving, losses persist

The company’s half-year revenues hit a record £18 million, and management has guided for full-year 2026 revenue of £40-43 million, a 35% year-on-year increase. The adjusted EBITDA loss narrowed from £16.8 million to £11.9 million, although the full-year pre-tax loss for the year ended April 2025 widened to £45.4 million. Cash remains strong at £210-215 million, buttressed by funds from Great British Energy.

The Chronos next-generation electrolyser — each unit delivering 2 MW, triple the current system’s output, with 40% lower costs and half the space — is central to the Sheffield ramp-up. Commercial operation is targeted for 2028. Separately, ITM Power is supplying six 20-MW Poseidon modules for Uniper’s Humber H2ub project in Killingholme, with a final investment decision due in 2026 and ramp-up from 2029. Pipeline contracts in Germany exceed 710 MW, and a 150-MW capacity reserve with RWE adds further visibility.

Technical scope for further gains

The 14-day RSI stood at about 65 at Tuesday’s close — elevated but short of overbought territory. The shares closed above both the 50-day moving average (164.12 pence) and the 200-day average (159.43 pence), yet slipped back from the intraday high to finish below the five- and ten-day averages, both around 182 pence. That retracement reflects the volatility that often accompanies a push to new highs.

Among eleven analysts covering the stock, seven rate it a "Buy", four say "Hold", and one recommends "Sell". The spread between the most bullish and bearish price targets underscores the binary nature of the next few days: between the grant outcome, index flows, and the emerging defence narrative, the market is pricing in multiple possibilities at once.