Royal Mail shares 'undervalued'

Investors are rushing to buy shares in Royal Mail, with predictions they could enjoy an instant profit of up to 40%.

The current share price is expected to rise significantly when trading starts next week and the demand has been so high the government has been accused of under-valuing Royal Mail.

ITV News Economics Editor Richard Edgar reports:

The Government is selling Royal Mail short by "pressing ahead" with its current sale, despite selling it at a "huge undervalue", the shadow business secretary said.

Chuka Umunna told Daybreak Royal Mail was valued at "between £2.6-3.3 bn" and endorsed by City brokers.

He warned the sale was becoming "a dream" for City speculators but a nightmare for the taxpayer.

How will Royal Mail privatisation affect you?

Investors have been rushing to buy shares in Royal Mail ahead of tomorrow's midnight deadline, hoping to enjoy instant profits amid reports the company has been undervalued.

The shares have been priced at between £2.60p and £3.30p but are expected to rise in value when the company floats on the stock market.

The company is currently valued at £3.3 billion but analysts at Panmure Gordon say it could be worth as much as £4.5 billion, the Daily Telegraph reported.

The Government is selling up to 62 percent of the business, with a 10 percent stake being handed for free to Royal Mail employees.

Details of Royal Mail share sale