What is Face Value of a Share? How It Affects Indian Investors

Face value (also called par value or nominal value) is the original price at which a share is issued by a company when it first creates its share capital. It is the value printed on the share certificate. In India, face values are commonly ₹1, ₹2, ₹5, or ₹10 per share. Face value has nothing to do with the current market price — a stock with a face value of ₹1 can trade at ₹3,000 or more in the market.

Face Value vs Market Price vs Book Value

Face Value is the original nominal value set when the company was incorporated. Market Price is what the share trades at today on the stock exchange, driven by supply and demand. Book Value is the company's net assets per share (total assets minus total liabilities, divided by shares outstanding). Book Value is a more meaningful measure of a company's intrinsic worth than face value.

Why Face Value Matters for Indian Investors

Face value matters in a few specific scenarios. Dividends are often declared as a percentage of face value — for example, '200% dividend on face value of ₹10' means ₹20 per share. Bonus issues are also expressed in face value terms. During stock splits, the face value is reduced — a 1:2 split on a ₹10 face value stock makes it ₹5, doubling the number of shares.

Key Points About Face Value

• Face value is the nominal price set when the company creates its share capital — not the market price.
• Common face values in India: ₹1, ₹2, ₹5, and ₹10.
• Dividends declared as % of face value — '200% on ₹10 FV' = ₹20 per share.
• Stock splits reduce the face value (e.g., 2:1 split changes ₹10 FV to ₹5 FV).
• The P/B ratio (Price to Book) is a more useful valuation metric than face value for investors.