ITM Power’s Index-Driven Rally Faces a Critical June as Institutional and Retail Investors Diverge

The British electrolyser maker has enjoyed one of its most eventful trading weeks in recent memory, but beneath the 16% surge over four sessions lies a market story of two very different investor camps pulling in opposite directions. ITM Power shares closed Thursday at 209 pence, a far cry from the 52-week low of 46 pence recorded a year ago — a near 300% recovery. Yet the real catalyst was not a corporate announcement but a mechanical event: entry into the MSCI United Kingdom Small Cap Index on May 29.

Passive funds and exchange-traded funds tracking the benchmark must now acquire the stock, creating substantial buying pressure at a market capitalisation of roughly £1.1 billion. International institutional investors, who use MSCI indices as screening tools, are suddenly paying attention to a name that was previously off their radar. Unsurprisingly, the shares hit a fresh 52-week high of 217 pence intraday on Thursday.

But retail investors are taking a different view. On the trading platform interactive investor, 53% of trades on Thursday were buys, a clear retail-driven appetite. However, earlier in the week on AJ Bell, ITM Power was the most-sold stock of the day as private investors cashed in on a sensational 401% annual rally. The tug-of-war highlights a market calibrating between index-driven institutional inflows and profit-taking by the individuals who rode the wave from the lows.

The company’s technology chief, Simon Bourne, sold the bulk of his 1.3 million share options at an average price of 157.44 pence, citing tax obligations, leaving him with roughly 656,000 shares. Chief executive Dennis Schulz, by contrast, has tied his own 1.3 million award to the successful delivery of the next-generation Chronos electrolyser and the closing of profitable contracts — a signal of confidence in the operational turnaround.

Should investors sell immediately? Or is it worth buying ITM Power?

That turnaround is now supported by improving financials. First-half revenue in the 2026 fiscal year hit a record £18 million, leading management to lift the full-year forecast to between £40 million and £43 million, a 35% year-on-year increase. The order book stands at £152 million, 71% of which is deemed profitable. The EBITDA loss narrowed to £11.9 million in the first half from £16.8 million a year earlier, and the company expects a full-year EBITDA loss of £27 million to £29 million. Net cash, bolstered by funds from Great British Energy, is projected to reach £170 million to £175 million by year-end — enough firepower to fund the next stage of growth.

Analyst opinion remains sharply divided. Of the eleven covering the stock, seven rate it a buy, four neutral, and one a sell. The range of price targets is a staggering 140 pence. Jefferies set a target of 200 pence, while Morgan Stanley upgraded to Overweight — the first positive rating on a British hydrogen name since 2021 — with a 170 pence target. Berenberg retains its Buy but trimmed the target to 110 pence, and UBS sits at Neutral with a fair value of 60 pence. Morgan Stanley estimates ITM will reach EBITDA breakeven in fiscal 2028, one year earlier than previously expected, contingent on booking around 200 MW in new orders.

June will be decisive for validating whether the rally has fundamental underpinning or merely anticipates events. Three binary decisions are converging. First, the final investment decision on the Chronos electrolyser programme, which promises triple the output of the current model at 40% lower cost and half the space. Second, the outcome of the UK’s second hydrogen allocation round (HAR2), which has 27 projects on the shortlist, including Uniper’s Humber H2ub site where ITM is to supply six 20-megawatt modules. Third, Uniper’s own final investment decision on Humber, for which planning permission is already in place.

ITM Power at a turning point? This analysis reveals what investors need to know now.

All eyes are now on September 15, when ITM Power will release full-year results. By then, all three June decisions could well be known, giving the market a clear picture of whether the operational turnaround is translating into sustainable growth.

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