Shares shifted as ITM Power surged 4.8% to £169.00 on Monday, capping a volatile week that saw the stock climb from a low of £156.80 just six days earlier. The rally reflects a confluence of improving sentiment: half-year results that showed progress on losses, a reiterated BUY rating from broker Zeus Capital, and anticipation around a £46.5 million government grant and potential inclusion in the MSCI Small Cap Index. For shareholders in a company that has burned cash for years while chasing the green hydrogen dream, the question is whether this marks a turning point or another false dawn. ITM Power Hits £169 on Broker Upgrades and Grant Hopes — But Can a Company Still Losing Money Justify a Billion-Pound Valuation?
Shares surged as ITM Power, the Sheffield-based maker of machines that split water into hydrogen using electricity, jumped 4.8% to £169.00 on Monday — touching the price target Morgan Stanley set when it upgraded the stock just weeks ago. The rally caps a remarkable 400% climb over twelve months, but the next eight days will test whether the run is built on substance or speculation.
Record Revenue, But Losses Still Run Deep
ITM posted record half-year revenue of £18 million, with £15.5 million from equipment sales.
The gross loss — the gap between revenue and the direct cost of making products — narrowed to £6.5 million from £10.2 million. That's real progress, yet the operating loss is still expected at roughly £30 million , and the pretax loss widened to £45.4 million in the year through April 2025.
A cash pile of roughly £198 million and zero debt cover the current burn rate about five times over , but the company is spending far more than it earns.
A Government Grant Decision Eight Days Away Could Change Everything
On May 26, the UK subsidy authority will rule on a £46.5 million grant for the Chronos production line — a project designed to automate manufacturing and triple output capacity to one gigawatt a year.
Combined with a £40 million equity stake from Great British Energy, the package promises to cut unit costs by 40%. Approval unlocks a June investment decision; rejection could pull the rug out from under the rally.
Index Inclusion Forces Passive Funds to Buy
ITM was added to the MSCI UK Small Cap Index on May 13, with the change taking effect after close on May 29.
Passive funds tracking the benchmark will need to adjust their portfolios, creating a wave of buying pressure especially pronounced for smaller stocks.
Wall Street Is Split — and the Valuation Is Extreme
Jefferies raised ITM to BUY with a £200 target , while Morgan Stanley upgraded to overweight at 170p, citing expected breakeven in fiscal 2028. But UBS holds a sober 60p target, warning the price-to-sales ratio of roughly 38x has run far ahead of reality.
The average 12-month target from 11 analysts is just 101p — 40% below the current price. The grant ruling and index rebalancing, separated by just three days, will reveal whether ITM Power's billion-pound bet on hydrogen has reached an inflection point or merely a peak.