Applications for Railtrack shares have to be in by noon next Wednesday. The minimum application is for 200 shares, and the first instalment will cost individual investors who registered with a share shop190p, a downpayment of pounds 380.

The price for the second instalment, payable on or before 3 June next year, will not be decided until 20 May, but it will be between 150p and 190p, making a total price of between 340p and 380p.

This makes them something of a pig in a poke, but analysts have done the sums and pronounced the shares cheap on most basic criteria.

Even at 390p the full price of the shares is barely seven times the company's expected after-tax earnings in a year which has just ended, those shares are paying a notional dividend of up to 7.5 per cent gross on the current share price, and the dividend is covered a comfortable 2.6 times by the net earnings per share.

This is only half the average return on shares in the top 100 UK companies, which this week cost an average of almost 15 times their after-tax earnings, the dividends gross up to a bare 4 per cent on the share price and average dividends are covered only 2.13 times by earnings. The figures for the top 250 shares look even less competitive.

By all the classic definitions, Railtrack shares are suspiciously cheap. On any other share it would mean that the City thinks the company's growth prospects are zero and the dividend is likely to be cut. But in this case it does look as if the shares are being offered to up to two million members of a trusting public on whose votes the Government will hope to rely at election time within the next 12 months.

The calculations are based on estimated earnings of 53.8p a share for the year just ended, and a notional dividend of 20.6p. An actual dividend of 13.75p a share net, equal to 17.18p a share before tax will be paid on October 4 to all shareholders who are on the register on September.4. This will guarantee a yield of almost 20 per cent on the partly paid price.

An interim dividend for the year just started will be paid next February and a final dividend in October 1997.

That should ensure guaranteed appreciation in the share price when dealings begin on 20 May. There is no guarantee that the price of the shares will not fall once the unsatisfied demand from institutions has been satisfied, but the extra dividend provides a cushion on the price, and an incentive for investors not to sell their allocation as soon as trading begins. The Railtrack shares will certainly fall when they go ex dividend in the autumn, however, and thereafter they will be increasingly vulnerable to the election of a Labour government that is determined to hold down rail fares.

Buy now, but watch for the best time to take a profit is the best advice to would-be Railtrack investors next week.