Face value of a share is the nominal, or par, value assigned to it by the company that issues it — for example ₹1, ₹2, ₹5 or ₹10. It is a fixed accounting figure recorded in the company’s books and printed on the share certificate. Crucially, it is not the market price, which is what the share actually trades at on an exchange.
This explainer is for general information only and is not investment advice.
What does face value mean?
When a company is formed, it divides its share capital into units and assigns each unit a base value. That base value is the face value (also called par value or nominal value). In India, common face values are ₹1, ₹2, ₹5 and ₹10, though a company can choose other amounts. If a company has a share capital of ₹10 crore split into shares of ₹10 face value, it has one crore shares. Face value is decided by the company and stays fixed unless the company deliberately changes it through a corporate action.
How is face value different from market price?
This is the distinction that confuses most beginners. Face value is set by the company and rarely changes. Market price is set by the market every second of every trading day, based on how much buyers are willing to pay and sellers willing to accept. A company with a ₹10 face value share might see that share trade at ₹50, ₹500 or ₹5,000 depending on its business performance and investor sentiment.
| Feature | Face value | Market price |
|---|---|---|
| Set by | The company | The market (buyers and sellers) |
| Changes? | Fixed, unless split or consolidated | Changes continuously during trading |
| Typical range (India) | ₹1 to ₹10 | Can be anything — a few rupees to thousands |
| Used for | Accounting, dividends, corporate actions | Buying and selling shares |
Is face value the same as book value?
No. Book value is the company’s net worth (assets minus liabilities) divided by the number of shares, and it reflects accumulated reserves and profits. Face value is just the base figure chosen at issue. All three — face value, book value and market price — are different numbers that tell you different things.
Why does face value matter?
Even though it is a nominal figure, face value is the reference point for several important things:
- Dividends are sometimes declared as a percentage of face value. A “200% dividend” on a ₹10 face value share means ₹20 per share — so you always need the face value to interpret such announcements.
- Stock splits work by reducing the face value, which we explain below.
- Bonus shares and accounting entries use face value as the base.
- Share capital on the balance sheet is calculated as face value multiplied by the number of shares.
How does a stock split change face value?
In a stock split, the company reduces the face value and increases the number of shares in proportion. If a ₹10 face value share is split into ten ₹1 shares, a holder of one share now holds ten, but the total value of the holding does not change because of the split itself. The market price adjusts down proportionally. This is why face value and splits are so closely linked.
How dividends relate to face value
In India, companies often declare dividends as a percentage of face value rather than as a rupee figure. If a company with a ₹10 face value share declares a 50% dividend, that means ₹5 per share. The same 50% on a ₹1 face value share would be just ₹0.50. This is why announcements can mislead if you ignore the face value: a large-sounding percentage can translate into a small rupee amount, and vice versa. Always convert the percentage to rupees using the face value before judging a dividend.
Face value in bonds and debentures
Face value is not only a share concept. Bonds and debentures also carry a face value, the amount the issuer promises to repay at maturity and the base on which interest (the coupon) is calculated. A debenture with a ₹1,000 face value paying an 8% coupon pays ₹80 a year. Understanding this is useful when you compare the fixed, promised nature of debt instruments with the open-ended ownership of equity.
Face value and share capital
On a company’s balance sheet, the “share capital” figure is simply the face value multiplied by the number of shares issued. If a company has issued one crore shares of ₹10 face value, its share capital is ₹10 crore. Any amount investors paid above the face value when the shares were first issued is recorded separately as a “securities premium”. This split — face value plus premium — is why the money a company raises in an IPO is usually far larger than its share capital figure.
Do all shares have a face value?
In India, shares are issued with a stated face value, and this is standard practice. Some other countries allow “no-par” shares that carry no fixed face value at all. For Indian investors, though, you can assume every listed share has a defined face value that you can look up on the exchange or in the company’s filings. Knowing it helps you read dividend announcements, understand splits, and make sense of the share capital on the balance sheet.
Three numbers investors confuse
It helps to hold three figures apart in your mind. Face value is the fixed base set by the company. Book value is the company’s net worth per share, reflecting reserves built up over time. Market price is what buyers and sellers agree on right now. A healthy company can have a low face value, a higher book value and a market price far above both, and none of those relationships, on its own, tells you whether the share is worth buying.
Where can you find a share’s face value?
A company’s face value is disclosed in its filings, its annual report, and on the stock exchange pages for the security. You can look it up on the NSE or BSE website for any listed company. When you hold shares in a demat account, the face value is part of the security’s standard details.
A common misunderstanding
Some new investors assume a share with a low face value is “cheap” and a good buy, or that a high market price relative to face value means a share is “expensive”. Neither is true. Face value tells you nothing about valuation. To judge whether a share is reasonably priced, investors look at measures such as the PE ratio and the company’s fundamentals, not the face value. For more such basics, see the business explainers on newsreverse com.
A worked dividend example
Imagine two companies. Company A has a ₹10 face value and declares a 100% dividend; Company B has a ₹2 face value and declares a 300% dividend. At first glance B’s headline looks far more generous. But in rupees, A pays ₹10 per share while B pays only ₹6 per share. The lower face value makes B’s percentage look dramatic even though the actual payout per share is smaller. This is the single most common way beginners misread dividend announcements, and the fix is always to translate the percentage into rupees using the face value.
In short: face value is a fixed, nominal figure set by the company; market price is what the share is worth to buyers and sellers right now. Keep the two separate and you will read corporate announcements far more clearly.
Frequently asked questions
What is the face value of a share?
Face value, also called par or nominal value, is the base value of a share as fixed by the company and stated in its records — commonly ₹1, ₹2, ₹5 or ₹10 in India. It is not the price at which the share trades in the market.
What is the difference between face value and market value?
Face value is a fixed accounting figure set by the company, while market value is the constantly changing price at which the share trades on an exchange, driven by demand, earnings and sentiment. A share with a ₹10 face value can trade at hundreds or thousands of rupees.
Can a company change the face value of a share?
Yes, through a stock split or consolidation. A split reduces the face value (for example from ₹10 to ₹1) and increases the number of shares, while a consolidation does the reverse. The total value of your holding is not changed by the action itself.
Why does face value matter?
Face value is the base for certain corporate actions. Dividends are sometimes declared as a percentage of face value, and face value is used in accounting, bond issuance and when a company announces splits or bonus shares.
Is a lower face value better?
Not by itself. Face value is just a reference figure and says nothing about whether a share is cheap or expensive, or a good investment. This article is for general information and is not investment advice.