ITM Power Shares: Analyst Flags Positive Valuation Signal

Zeus Capital welcomed ITM Power’s (LON: ITM) £86.5 million UK government funding package as a significant positive for the electrolyser manufacturer in a note on Thursday following the announcement, arguing the combined equity and grant structure is considerably less dilutive than the headline share price implies.

The funding comprises a £40 million equity raise at 55.56 pence per share by Great British Energy, the government’s publicly owned energy vehicle, alongside a £46.5 million grant from the Department for Energy Security and Net Zero to support construction of ITM’s new Chronos electrolyser manufacturing line in Sheffield over the next three years.

The equity raise gives GB Energy a 10.4% stake in the company and is expected to boost ITM’s fiscal 2026 cash guidance to £210 million to £215 million from £170 million to £175 million previously.

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Zeus noted that while the £40 million raise is priced at 55.56 pence, the grant component carries no share dilution.

“If you add the two amounts together, and assume ITM is getting £86.5m of funding in return for the 72.0m shares, this would imply a price of 120.15p, which is much less dilutive,” the firm said.

Zeus believes the funding package is positive for several reasons beyond the cash injection itself, including its implicit validation of ITM’s order pipeline and the UK government’s commitment to supporting domestic hydrogen manufacturing capacity.

The new 1GW-per-year Chronos line addresses the bulk of the £120 million capital expenditure expected for the project.

Zeus updated its forecasts to reflect the equity raise and revised cash guidance, and also adjusted its fiscal 2027 numbers to account for the commencement of Chronos capital spending and initial grant receipts.