The face value (also called par value or nominal value) of a share is the fixed accounting value the company assigns to it when the share is created, commonly ₹1, ₹2, ₹5 or ₹10 in India. It is not the price you pay in the market; it is the share's "on paper" value in the company's books.
How is face value different from market price?
The two numbers live in different worlds:
| Face value | Market price | |
|---|---|---|
| Set by | The company, when shares are issued | Buyers and sellers, every trading day |
| Changes? | Only through corporate actions like a split | Constantly, tick by tick |
| Typical size | ₹1, ₹2, ₹5, ₹10 | Anything, ₹8 or ₹8,000 |
| Tells you | An accounting/legal base value | What the market thinks the share is worth |
Kavita owns shares of Bharat Paints Ltd. The face value is ₹10, but the market price is ₹1,450. That gap is normal and says nothing sinister. The market price reflects the business's earnings and prospects, while the face value is just the historical base each share was carved out at. A "high" face value is not better than a low one, and comparing market price to face value tells you nothing about whether a stock is cheap.
The company's share capital in its balance sheet is simply face value × number of shares issued.
Why does face value matter at all?
Three places you will actually meet it:
1. Dividends are declared on face value. When a company announces a "150% dividend", that percentage applies to the face value, not the market price. For Bharat Paints (face value ₹10), a 150% dividend means ₹15 per share. On Kavita's market price of ₹1,450, that is about a 1% yield, so never read the headline percentage as a return on your investment. Companies also often state it directly as "₹15 per share", which is clearer.
2. Stock splits change the face value. A split divides each share into smaller ones by cutting the face value. A ₹10 face value split to ₹2 turns 1 share into 5, and the market price adjusts proportionally. The mechanics are covered in what is a stock split.
3. IPO pricing language. When a company issues shares above face value, the excess is called the premium. An IPO priced at ₹450 for a ₹10 face-value share is "issued at a premium of ₹440". This is standard practice and not a red flag by itself.
Can face value change?
Yes, but only through corporate actions:
- A split reduces it (₹10 → ₹5, ₹2 or ₹1), multiplying the share count.
- A consolidation (reverse split) increases it, shrinking the share count.
- A bonus issue does not change face value. It issues extra shares of the same face value out of the company's reserves.
In every case the total value of your holding is unchanged at the moment of the action; only the number of pieces and the per-piece price change.
Things to keep in mind
- Never judge a stock by comparing market price with face value. They measure different things.
- Dividend percentages in announcements apply to face value; convert to ₹ per share, then compare with the market price to see the actual yield.
- After a split, don't panic when the price halves or worse overnight. Check whether the face value changed first.
- Exchanges show a stock's face value on its quote page; it is public information, not something you need to calculate.
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