Global analysts, Goldman Sachs has said that it has set a target price of 610p for the shares of Royal Mail after the investment banker had advised the UK government to set the flotation price at a much lower level.  Royal Mail's shares increased 32p to 565p on the stock exchange in London and is now trading around 71 per cent higher than the 330p price at which it made its debut in the stock market.

The mailing service has a market value of £5.6 billion and it appears that the firm will enter the FTSE 100 Index during the next one month. The business secretary, Vince Cable defended the listing price of the mailing service after a strong performance helped boost its share prices. The sale was priced at 330p a share and valued the firm at £3.3 billion. The share value has risen and it values the company at £5.7 billion.

Vince Cable, the Business Secretary and the Department of Business are now facing allegations that the shares of the recently privatised Royal Mail too cheaply as the share value rises to 565p. The government had valued the shares at 330p. Many believe that the government undervalued the shares of the mailing service in order to ensure that the prices rise after floatation and prove that the issue was a success. However, they are now accusing the government of causing loss of hundreds of millions of pounds to the taxpayers.

Cable and Michael Fallon, the business minister indicated that it will take a longer time for the true share value as the share prices remained irrational. They said that they decided not to increase share price by 20p due to concerns over partial US government shutdown during the previous month.